Kristen and Harrison are equal partners in the KH Partnership. The partners formed the partnership five years ago by contributing cash. Prior to any distributions Harrison has a basis in his partnership interest of $44,000. On December 31, KH makes a proportionate operating distribution of $50,000 cash to Harrison. What is the amount and character of Harrison's recognized gain or loss and what is his remaining basis in KH?

a.$0 gain, $0 basis

b.$6,000 capital gain, $0 basis

c.$6,000 capital loss, $0 basis

d.$6,000 capital gain, $44,000 basis

Question

Business

Barr

7 October, 23:51

Kristen and Harrison are equal partners in the KH Partnership. The partners formed the partnership five years ago by contributing cash. Prior to any distributions Harrison has a basis in his partnership interest of $44,000. On December 31, KH makes a proportionate operating distribution of $50,000 cash to Harrison. What is the amount and character of Harrison's recognized gain or loss and what is his remaining basis in KH?

a.$0 gain, $0 basis

b.$6,000 capital gain, $0 basis

c.$6,000 capital loss, $0 basis

d.$6,000 capital gain, $44,000 basis

+1

Answers (1)

Know the Answer?

Sage Dean · Answer 1

Correct option is B.

$6,000 capital gain, $0 basis

Explanation:

Harrison perceives an increase equivalent to the distinction between his basis in KH and the appropriation since he gets just cash in the distribution and the sum surpasses his basis in KH. He dispenses his whole premise in KH to the premise in the cash got coming about in$0 basis in KH after the distribution.