Question

Partner A received the following in a nonliquidating distribution: Basis FMV Cash $20,000 $20,000 Inventory Item 1 $15,000 $18,000 Inventory Item 2 $12,000 $4,000 Capital Asset 1 $15,000 $8,000 Capital Asset 2 $10,000 $20,000 $72,000 $70,000 Assume A’s basis in the partnership before the distribution was $35,000. What would the bases of the assets be to A?

Answer 1

Partner A received the following in a nonliquidating distribution: Basis FMV Cash $20,000 $20,000 Inventory Item 1 $15,000 $18,000 Inventory Item 2 $12,000 $4,000 Capital Asset 1 $15,000 $8,000 Capital Asset 2 $10,000 $20,000 $72,000 $70,000 Assume A’s basis in the partnership before the distribution was $35,000. What would the bases of the assets be to A?

Answer:-

The money of $20,000 would lessen the premise accessible to the stock to $20,000. Be that as it may, since the stock has add up to premise of $15,000 and $12,000 = $27,000, there is a $7,000 deficiency. The deficiency will initially be apportioned to the deteriorated stock (12000 - 4000 = 8000) (Item 2), to the degree of the devaluation. The other ($7000 - $8000 =$1,000 of shortage will be allotted to the stock things as indicated by their outstanding bases:

Bitmap Bitmap Bitmap The number of team 1 = $1000 x $15000/$19000	$      789.47
The number of Item 2= $1000 x $4000/$19000	$      210.53
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Hence
The number of Item 1’s basis would be $15000 - $789.47	$ 14,210.53
The number of Item 2’s basis would be $12000 - $8000 - $210.53	$   3,789.47

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