Kristen and Harrison Are Equal Partners in the KH Partnership

question 85

Multiple Choice

Kristen and Harrison are equal partners in the KH Partnership. The partners formed the partnership 5 years ago by contributing cash. Prior to any distributions Harrison has a basis in his partnership interest of $44,000. On December 31, KH makes a proportionate operating distribution of $50,000 cash to Harrison. What is the amount and character of Harrison's recognized gain or loss and what is his remaining basis in KH?

• A) $0 gain, $0 basis.
• B) $6,000 capital gain, $0 basis.
• C) $6,000 capital loss, $0 basis.
• D) $6,000 capital gain, $44,000 basis.

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