Assume in problem 46 above that Matt had received property 2 , subject to a \(\$ 70,000\) mortgage, rather than property 3 . Matt assumed responsibility for the mortgage in connection with the distribution. As before, the distribution reduced Matt's interest in the partnership from one-third to one-seventh.

a. Will Matt recognize any gain or loss in connection with this distribution?

b. What basis will Matt take in property 2?

c. What will be Matt's remaining tax basis in his partnership interest?

problem 46

Williams Brotherŝ Partnership had the following balance sheets at December 31:

All three properties owned by the partnership are investment properties. On December 31 , the partnership distributed property 3 to Matt, reducing his interest in the partnership from one-third to one-seventh.

a. Will Matt recognize any gain or loss in connection with this distribution?

b. What will be Matt's tax basis in property 3 received from the partnership?

c. What will be Matt's remaining tax basis in his partnership interest?

Transcribed Image Text:

Cash Property 1 Property 2 Property 3 TOTAL ASSETS Liabilities Capital, Matt Capital, Justin Capital, Jeff TOTAL LIABILITIES & CAPITAL Basis 30,000 103,000 114,000 32,000 279,000 126,000 51,000 51,000 51,000 279,000 FMV 30,000 151,000 120,000 50,000 351,000 126,000 75,000 75,000 75,000 351,000