During the current year, partner J received a proportionate distribution from HIJK Partnership consisting of $13,000 cash and land (an investment asset to the partnership). The land had a basis to the partnership of $20,000 and FMV of $33,000. Prior to the distribution, J’s basis in his partnership interest was $40,000. The distribution had no effect on J’s profit and loss sharing ratio.

1. How much gain or loss must J recognize because of this distribution? What basis will J have in the land? What basis will J have in his partnership interest after the distribution?
2. Does the partnership recognize any gain on the distribution of the appreciated land to J?
3. How would the answer to (a) change if J’s basis in his interest prior to distribution had been $25,000 rather than $40,000.

Answer rating: 100% (QA)

Solution according to the data Ans During the current year partner J receiv... View the full answer