Adnan Had an Adjusted Basis of $11,000 for His Interest

question 95

Essay

Adnan had an adjusted basis of $11,000 for his interest in the Adnan and Donnell Partnership on December 31. On this date, Adnan received from the partnership, in complete liquidation of his interest, $10,000 cash and land with a $2,000 basis to the partnership and a $3,000 FMV. What is Adnan's basis for the land distributed to him?

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Definitions:

Special-Interest Effect

The impact on policy or decision-making driven by the concentrated benefits to a small group while the costs are dispersed among the general population.

Pork-Barrel Politics

Refers to the allocation of public funds for projects designed primarily to benefit constituents of a politician in return for their political support.

Earmarks

Narrow, specially designated spending authorizations placed in broad legislation by senators and representatives for the purpose of providing benefits to firms and organizations within their constituencies. Earmarked projects are exempt from competitive bidding and normal evaluation procedures.