Daniel's Basis in the DAT Partnership Is $135,000 If DAT Has a §754 Election in Place, What Is

question 68

Essay

Daniel's basis in the DAT Partnership is $135,000. DAT distributes its land to Daniel in complete liquidation of his partnership interest. DAT reports the following balance sheet just before the distribution: $\begin{array}{lrr}\text { Assets: } & \underline{\text { Basis }} & \underline{\text { FMV }} \\\text { Cash } & \$ 110,000 & \$ 110,000 \\\text { Stock (investment) } & \mathbf{2 4 0 , 0 0 0} & 110,000 \\\text { Land } & \underline{55,000} & \underline{110,000} \\\text { Totals } & \underline{\$ 405,000} & \underline{\$ 330,000}\end{array}$

$\begin{array}{l}\text { Liabilities and capital: }\\\begin{array}{cr}\text { Capital - Daniel } & \$ 135,000 \\\text { - Alexandra } & 135,000 \\\text { - Travis } & \underline{135,000} \\\text { Totals } & \$ \mathbf{4 0 5 , 0 0 0}\end{array}\end{array}$ If DAT has a §754 election in place, what is the amount of the special basis adjustment resulting from the distribution to Daniel? What is DAT's basis in its remaining assets?

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Definitions:

Identical

Identical means exactly the same, without any difference in form, nature, or substance, often used to describe objects, products, or entities.

Long-run Equilibrium

A state in which all factors of production and inputs in a market are fully adjusted to the market conditions, allowing for steady-state operation without excess supply or demand.

Perfectly Competitive

A market structure characterized by a large number of small firms, homogeneous products, and no barriers to entry or exit.

Price

The capital needed to purchase a particular good or service.