Sam's basis in his partnership interest is $46,000. In a proportionate non-liquidating distribution, Sam receives $6,000 of

Question:

Sam's basis in his partnership interest is $46,000. In a proportionate non-liquidating distribution, Sam receives $6,000 of cash and two parcels of land, each with a basis of $30,000 to the partnership. The values of the land parcels are $40,000 and $20,000.

a. How much gain or loss, if any, must Sam recognize on the distribution?

b. What basis will Sam take in each parcel of land?

Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...