At the beginning of the year, Elsie's basis in the E&G Partnership interest is $90,000.She receives a proportionate nonliquidating distribution from the partnership consisting of $10,000 of cash, unrealized accounts receivable (basis of $0, fair market value $40,000), and land (basis of $30,000, fair market value of $50,000).After the distribution, Elsie's bases in the accounts receivable, land, and partnership interest are:
A)$0; $30,000; and $50,000.
B)$0; $50,000; and $30,000.
C)$40,000; $30,000; and $10,000.
D)$40,000; $40,000; and $0.
E)None of the above.

Question

Quizplus · Accepted Answer

Elsie's basis in the accounts receivable is $0 because they are unrealized. The basis in the land is $30,000, which is the partnership's basis in the land. After the distribution, her remaining basis in the partnership interest is $50,000 ($90,000 initial basis - $10,000 cash - $30,000 land basis).

At the Beginning of the Year, Elsie's Basis in the E&G