Jeremiah Received a Proportionate Nonliquidating Distribution of Land from the JZ

question 50

True/False

Jeremiah received a proportionate nonliquidating distribution of land from the JZ Partnership. The land had a fair market value of $65,000 and a basis to the partnership of $50,000. The land was held for investment purposes by the partnership. Jeremiah's basis in his partnership interest immediately before the distribution was $40,000. The partnership's only remaining assets were cash, another parcel of land, and a building on that land. If the partnership has a § 754 election in effect, it will record a $10,000 step-up; a portion of the step-up will be allocated to the building and will be depreciated; and the step-up and any related depreciation expense will be allocated among all the
partners in the partnership.

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Definitions:

Interest Expense

The cost incurred by an entity for borrowed funds over a period, represented as a financial charge or fee.

Equity Multiplier

A financial ratio that measures the amount of a company’s assets financed by its shareholders' equity, indicating leverage.

Assets Support

Refers to the financial or operational support provided to maintain or enhance the value of a company's assets.