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.