Lindsey contributed investment land having an $18,000 basis and a $22,000 FMV along with $4,000 of...

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Lindsey contributed investment land having an $18,000 basis and a $22,000 FMV along with $4,000 of cash to the LK Partnership when it was formed. Two years later, the partnership distributed the land to Kelsey, another partner. At the time of the distribution, the land had a FMV of $26,000, and Lindsey and Kelsey's bases in their partnership interests were $21,000 and $30,000 respectively. Each own 50% of the partnership interest. 1. What gain must be recognized on the distribution and who must recognize it? 2. What are the bases for Lindsey and Kelsey's interests in the partnership after the distribution? 3. What is Kelsey's basis in the land? 4. How would your response change in part a. if instead the land was sold at fair market value ($26,000) to an unrelated third party rather than distributed to Kelsey? What gain or loss must be recognized on the distribution, and who must recognize it (how much gets allocated to each partner)? Lindsey contributed investment land having an $18,000 basis and a $22,000 FMV along with $4,000 of cash to the LK Partnership when it was formed. Two years later, the partnership distributed the land to Kelsey, another partner. At the time of the distribution, the land had a FMV of $26,000, and Lindsey and Kelsey's bases in their partnership interests were $21,000 and $30,000 respectively. Each own 50% of the partnership interest. 1. What gain must be recognized on the distribution and who must recognize it? 2. What are the bases for Lindsey and Kelsey's interests in the partnership after the distribution? 3. What is Kelsey's basis in the land? 4. How would your response change in part a. if instead the land was sold at fair market value ($26,000) to an unrelated third party rather than distributed to Kelsey? What gain or loss must be recognized on the distribution, and who must recognize it (how much gets allocated to each partner)?

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Lets address each question one by one 1 Gain Recognition on Distribution When the partnership distri... View the full answer