Assume the facts of Problem 27. In each independent case,

Assume the facts of Problem 27. In each independent case, are additional planning opportunities available to the partnership to maximize its inside basis in its assets? If so, by how much can the basis be increased? What is the effect of any basis increase to the distributee partner or the other partners?


In problem

a. Kim receives $20,000 cash in partial liquidation of her interest in the partnership. Kim’s outside basis for her partnership interest immediately before the distribution is $3,000.

b. Kourtni receives $40,000 cash and land with an inside basis to the partnership of $30,000 (value of $50,000) in partial liquidation of her interest. Kourtni’s outside basis for her partnership interest immediately before the distribution is $80,000.

c. Assume the same facts as in (b), except that Kourtni’s outside basis for her partnership interest immediately before the distribution is $60,000.

d. Klois receives $50,000 cash and inventory with a basis of $30,000 and a fair market value of $50,000 in partial liquidation of her partnership interest. Her basis was $90,000 before the distribution. All partners received proportionate distributions.

Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
Liquidation
Liquidation in finance and economics is the process of bringing a business to an end and distributing its assets to claimants. It is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations when they are due....
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...

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