1) Assume a partnership distributing non-cash property (only) in liquidation. Briefly explain what happens, from a partner’s standpoint, in the event of a basis mismatch – i.e., when a receiving partner’s adjusted tax basis in her partnership interest is either higher or lower than the partnership’s own adjusted tax basis in the distributed property.

2) ABC L.P., a calendar-year going-concern partnership, had three equal part-ners, A, B, and C. On March 31, 2020, partner C sold her entire partnership in-terest to D, who was accepted as a new/substitute partner effective April 1, 2020, the partnership changing its name on that date to ABD, L.P.

Briefly discuss how 2020 Schedule K-1 amounts should be split or allocated be-tween C and D on these facts. Include discussion of what choices the partnership itself might make and any timing aspects of C’s and D’s separate reporting obligations.

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Answer to question 1 If the receiving partners adjusted tax basis in her partnership interest is higher than the partnerships own adjusted tax basis in the distributed property the partner will recogn... View the full answer