Mack Has a Basis in a Partnership Interest of $200,000

question 104

Multiple Choice

Mack has a basis in a partnership interest of $200,000, including his share of partnership debt. At the end of the current year, the partnership distributed to Mack, in a proportionate nonliquidating distribution, cash of $20,000, inventory (basis to the partnership of $30,000 and fair market value of $40,000) , and land (basis to the partnership of $40,000 and fair market value of $42,000) .In addition, Mack's share of partnership debt decreased by $12,000 during the year. What basis does Mack take in the inventory and land and in the partnership interest (including debt share) following the distribution?

• A)$30,000 basis in inventory; $40,000 basis in land, $98,000 basis in partnership.
• B)$30,000 basis in inventory; $42,000 basis in land, $110,000 basis in partnership.
• C)$40,000 basis in inventory; $40,000 basis in land, $86,000 basis in partnership.
• D)$40,000 basis in inventory; $42,000 basis in land, $98,000 basis in partnership.
• E)$40,000 basis in inventory; $42,000 basis in land, $110,000 basis in partnership.

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Definitions:

Digital Display

An electronic screen or panel that shows information in visual form through digits, often found in devices like clocks, meters, and dashboards.

Hertz

Unit of wave frequency equivalent to one cycle per second.

Frequency

Number of repetitions of a process or series of events within a specific time frame.

Multiplexing

A technique in telecommunications and signal processing where multiple signals or information streams are combined into one signal over a shared medium.