Two years ago, Kimberly became a 30 percent partner in the KST Partnership with a contribution of investment land with a $16,000 basis and a $24,400 fair market value. On January 2 of this year, Kimberly has a $22,200 basis in her partnership interest and none of her pre-contribution gain has been recognized. On January 2 Kimberly receives an operating distribution of a tract of land (not the contributed land) with a $19,800 basis and an $28,200 fair market value.
b. What is Kimberly’s remaining basis in KST after the distribution?
Basis:
c. What is KST’s basis in the land Kimberly contributed after Kimberly receives this distribution?
Basis:
ANSWER | |
b) | |
This is to be noted that of partner recors a gain on account of pre-contribution then this will increase the outside basis of the partner. The calculation make it more clearer: | |
Basis of Partnership | $ 22,200 |
Add : Gain | $ 6,000 |
Less : Carryovers basis | ($ 19,800) |
$ 8,400 | |
Therefore Kimberly's basis is $ 8400 ($ 22,200 + $ 6,000 - $ 19,800) | |
c) | |
The calculation as required in the quiestion is as under : | |
Contribution : | $ 16,000 |
Add : kimberly' s gain | $ 6,000 |
$ 22,000 | |
This pionts to the fact that the partner's gain incresese the partnership's basis that would arise as per -contribution gain. |
Two years ago, Kimberly became a 30 percent partner in the KST Partnership with a contribution...
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