Proportionate liquidating distribution

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of ,000, inventory (basis to the partnership of ,000 and fair market value of ,000), and land (basis to the partnership of ,000 and fair market value of ,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? ,000 loss; ,000 basis in property;

,46 At the beginning of the year, Elsie’s basis in the E&G Partnership interest is ,000. After the distribution, Megan’s bases in the land and inventory are, respectively: a. Immediately before the distribution, Andrew’s adjusted basis in the partnership interest was ,000. ,47 Megan’s basis was 0,000 in the MAR Partnership interest just before she received a proportionate nonliquidating distribution consisting of land held for investment (basis of ,000, fair market value of 0,000) and inventory (basis of ,000, fair market value of ,000). The distribution consists of ,000 cash and property (adjusted basis to the partnership of ,000 and fair market value of ,000). This discussion of the tax consequences of contributions to partnerships will also apply to limited liability companies unless the limited liability company has elected to be taxed as a corporation.As with S corporations, the tax consequences of a distribution to a partner are heavily dependent on the partner’s basis in his partnership interest.

remaining basis.

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of ,000, inventory (basis to the partnership of ,000 and fair market value of ,000), and land (basis to the partnership of ,000 and fair market value of ,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? ,000 loss; ,000 basis in property;

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of ,000, inventory (basis to the partnership of ,000 and fair market value of ,000), and land (basis to the partnership of ,000 and fair market value of ,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? ,000 loss; ,000 basis in property;

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of ,000, inventory (basis to the partnership of ,000 and fair market value of ,000), and land (basis to the partnership of ,000 and fair market value of ,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? ,000 loss; ,000 basis in property;

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of ,000, inventory (basis to the partnership of ,000 and fair market value of ,000), and land (basis to the partnership of ,000 and fair market value of ,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? ,000 loss; ,000 basis in property;

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of ,000, inventory (basis to the partnership of ,000 and fair market value of ,000), and land (basis to the partnership of ,000 and fair market value of ,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? ,000 loss; ,000 basis in property;

,46 At the beginning of the year, Elsie’s basis in the E&G Partnership interest is ,000. After the distribution, Megan’s bases in the land and inventory are, respectively: a. Immediately before the distribution, Andrew’s adjusted basis in the partnership interest was ,000. ,47 Megan’s basis was 0,000 in the MAR Partnership interest just before she received a proportionate nonliquidating distribution consisting of land held for investment (basis of ,000, fair market value of 0,000) and inventory (basis of ,000, fair market value of ,000). The distribution consists of ,000 cash and property (adjusted basis to the partnership of ,000 and fair market value of ,000). This discussion of the tax consequences of contributions to partnerships will also apply to limited liability companies unless the limited liability company has elected to be taxed as a corporation.As with S corporations, the tax consequences of a distribution to a partner are heavily dependent on the partner’s basis in his partnership interest.

remaining basis. [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] gain or loss; ,000 basis in property; [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] remaining basis. [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] gain or loss; ,000 basis in property; ,000 remaining basis. [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] gain or loss; ,000 basis in property; ,000 remaining basis. ,000 gain; ,000 basis in property; [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] remaining basis. ,49 Martin has a basis in a partnership interest of 0,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

remaining basis. [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] gain or loss; ,000 basis in property; [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] remaining basis. [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] gain or loss; ,000 basis in property; ,000 remaining basis. [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] gain or loss; ,000 basis in property; ,000 remaining basis. ,000 gain; ,000 basis in property; [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] remaining basis. ,49 Martin has a basis in a partnership interest of 0,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

remaining basis. [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] gain or loss; ,000 basis in property; [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] remaining basis. [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] gain or loss; ,000 basis in property; ,000 remaining basis. [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] gain or loss; ,000 basis in property; ,000 remaining basis. ,000 gain; ,000 basis in property; [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] remaining basis. ,49 Martin has a basis in a partnership interest of 0,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

remaining basis. [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] gain or loss; ,000 basis in property; [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] remaining basis. [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] gain or loss; ,000 basis in property; ,000 remaining basis. [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] gain or loss; ,000 basis in property; ,000 remaining basis. ,000 gain; ,000 basis in property; [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] remaining basis. ,49 Martin has a basis in a partnership interest of 0,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

remaining basis. [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] gain or loss; ,000 basis in property; [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] remaining basis. [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] gain or loss; ,000 basis in property; ,000 remaining basis. [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] gain or loss; ,000 basis in property; ,000 remaining basis. ,000 gain; ,000 basis in property; [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] remaining basis. ,49 Martin has a basis in a partnership interest of 0,000.

gain or loss; ,000 basis in property; [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] remaining basis. [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] gain or loss; ,000 basis in property; ,000 remaining basis. [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] gain or loss; ,000 basis in property; ,000 remaining basis. ,000 gain; ,000 basis in property; [[

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)). At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000). How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

||

These adjustments to basis work with the rules governing distributions to ensure that partnership income is taxed and deductions are taken only once.

A partner will not recognize gain or loss on a distribution, with three exceptions: If the partner receives an in kind distribution from the partnership (other than a liquidating distribution), the partner’s basis in the property received equals the property’s adjusted basis in the hands of the partnership immediately before the distribution (but not in excess of the partner’s basis in his partnership interest), less any money distributed in the same transaction.[25] A partner’s basis in property distributed in kind as part of a liquidating distribution is the same as his basis in the partnership, reduced by money distributed to him in the same transaction.[26] Important Note: Special rules apply to disproportionate distributions of partnership assets that include unrealized receivables (as defined in Code § 751(c)) and substantially appreciated inventory (as determined by Code § 751(b)(3)(A) and (d)).

At the end of the current year, the partnership distributed to Martin, in a proportionate nonliquidating distribution, cash of $10,000, inventory (basis to the partnership of $6,000 and fair market value of $12,000), and land (basis to the partnership of $20,000 and fair market value of $15,000).

How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest? $3,000 loss; $12,000 basis in property; $0 remaining basis. $0 gain or loss; $15,000 basis in property; $0 remaining basis. $0 gain or loss; $20,000 basis in property; $15,000 remaining basis. $0 gain or loss; $12,000 basis in property; $23,000 remaining basis. $5,000 gain; $20,000 basis in property; $0 remaining basis. ,49 Martin has a basis in a partnership interest of $100,000.

]] remaining basis. ,49 Martin has a basis in a partnership interest of 0,000. Unlike the rules that apply to C corporations, which tax income both at the entity and at the owner level, the partnership rules are designed to only tax income once, at the owner level.

[[

,46 At the beginning of the year, Elsie’s basis in the E&G Partnership interest is $60,000.

After the distribution, Megan’s bases in the land and inventory are, respectively: a. Immediately before the distribution, Andrew’s adjusted basis in the partnership interest was $40,000.

,47 Megan’s basis was $100,000 in the MAR Partnership interest just before she received a proportionate nonliquidating distribution consisting of land held for investment (basis of $80,000, fair market value of $100,000) and inventory (basis of $60,000, fair market value of $60,000). The distribution consists of $50,000 cash and property (adjusted basis to the partnership of $34,000 and fair market value of $42,000).

This discussion of the tax consequences of contributions to partnerships will also apply to limited liability companies unless the limited liability company has elected to be taxed as a corporation.

As with S corporations, the tax consequences of a distribution to a partner are heavily dependent on the partner’s basis in his partnership interest.

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,46 At the beginning of the year, Elsie’s basis in the E&G Partnership interest is $60,000. After the distribution, Megan’s bases in the land and inventory are, respectively: a. Immediately before the distribution, Andrew’s adjusted basis in the partnership interest was $40,000. ,47 Megan’s basis was $100,000 in the MAR Partnership interest just before she received a proportionate nonliquidating distribution consisting of land held for investment (basis of $80,000, fair market value of $100,000) and inventory (basis of $60,000, fair market value of $60,000). The distribution consists of $50,000 cash and property (adjusted basis to the partnership of $34,000 and fair market value of $42,000). This discussion of the tax consequences of contributions to partnerships will also apply to limited liability companies unless the limited liability company has elected to be taxed as a corporation.As with S corporations, the tax consequences of a distribution to a partner are heavily dependent on the partner’s basis in his partnership interest.

]]

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