D is corrent. If both cash and noncash property are received in a single distribution, the basis for the partner’s partnership interest is first reduced by the cash, before the noncash property. Although a partner’s basis for distributed property is generally the same as the partnership’s former basis for the property (a transferred basis), the distributed property’s basis will be limited to the partner’s basis for the partnership interest reduced by any money received in the same distribution. Here, the basis of Hart’s partnership interest of $30,000 is first reduced by the $24,000 of cash received, with the remaining basis of $6,000 allocated as the basis for the parcel of land received.
A is incorrect. Basis transfers to the distributee partner.
A is incorrect. Basis transfers to the distributee partner.
C is incorrect. Hart’s land basis is limited to his remaining basis after subtracting the cash.
|
