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7 March, 08:13

Jenny has a $54,000 basis in her 50% partnership interest in the JM Partnership before receiving any distributions. This year JM makes a proportionate operating distribution to Jenny of a parcel of land with an $80,000 fair value and a $64,000 basis to JM. The land is encumbered with a $30,000 mortgage (JM's only liability). What is Jenny's basis in the land and her remaining basis in JM after the distribution?

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  1. 7 March, 10:34
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    Answer and Explanation:

    The computation of the basis in the land and her remaining basis in JM after the distribution is shown below:

    Basis in the land is equal to the basis to JM i. e $64,000

    And, the remaining basis is

    = Basis in her partnership interest + 50% contribution - basis to JM

    = $54,000 + $15,000 - $64,000

    = $5,000

    We simply applied the above formula to find out the basis in the land and the remaining basis
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