Frank Receives a Proportionate Nonliquidating Distribution from the AEF Partnership

question 11

Multiple Choice

Frank receives a proportionate nonliquidating distribution from the AEF Partnership. The distribution consists of $10,000 cash and property (adjusted basis to the partnership of $54,000 and fair market value of $60,000) . Immediately before the distribution, Frank's adjusted basis in the partnership interest was $50,000. His basis in the noncash property received is:

• A)$0.
• B)$40,000.
• C)$54,000.
• D)$60,000.
• E)None of the above.

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Definitions:

Limited Partnership

A business structure where one or more partners are liable only to the extent of their investments, while at least one other partner has unlimited liability.

General Partners

Individuals in a partnership who are responsible for the management of the business and are personally liable for the partnership's debts.

Corporate Income

The income generated by companies from their operations, including sales, services, and investments.

Taxed

Subjected to a charge or levy by the government on income, transactions, or property to fund public expenditures.