Miranda Wrights a partner in a partnership receives a distribution of $140,000 and property with an FMV
Question:
Miranda Wrights a partner in a partnership receives a distribution of $140,000 and property with an FMV of $80,000 and an inside basis of $70,000. Miranda’s outside basis is $200,000.
Question 1: Explain whether the rules a distribution of money and property in which the distribution of money is considered prior to the distribution of property is better or worse tax-wise for the recipient partner than if the distribution of property was considered prior to the distribution of money.
Question 2: The rule is that if the inside basis of property distributed to a partner exceeds the partner’s outside basis, the partner’s basis in the property is the partner’s outside basis. Explain why this rule is consistent with basic tax principles.
College Accounting
ISBN: 978-1111528126
11th edition
Authors: Tracie Nobles, Cathy Scott, Douglas McQuaig, Patricia Bille