Sarah Owns a 30% Interest in the Capital and Profits

question 14

True/False

Sarah owns a 30% interest in the capital and profits of the STP Partnership.Immediately before she receives a proportionate nonliquidating distribution from STP,the basis of her partnership interest is $25,000.The distribution consists of $20,000 in cash and land with a fair market value of $40,000.STP's adjusted basis in the land immediately before the distribution is $30,000.As a result of the distribution,Sarah recognizes a gain of $35,000 and her basis in the land is $40,000.

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