Question

Randolph is a 30% partner in the RD Partnership, On January 1/RD distributes $10,000 cash, inventory with a fair value of $20,000 (inside basis of $15,000), and a parcel of land with a fair value of $10,000 (inside basis of $5,000) to Randolph in complete liquidation of his interest. RD has no liabilities at the date of the distribution. Randolph's basis in his RD partnership interest his is $37,000. What is Randolph's basis in the distributed inventory and land?

Answer 1

ANSWERS; $ 15,000 inventory , $ 12,000 land

Randolph's bases in the distributed assets are $ 10,000 cash , $ 15,000 inventory and $ 12,000 land.

First He allocates his outside basis to the distributed assets in an amount equal to RD'S basis .

Then He allocates remaining basis to assets other than cash and hot assets with unrealized

appreciation .Finally , the remaining basis is allocated to assets other than cash and hot assets.