Asked by Nathan Tsung on Jun 25, 2024
Verified
Sabrina has a $12,000 basis in her S&B partnership interest.Sabrina receives a current cash distribution of $10,000 and equipment with a $5,000 basis (FMV $6,000) .What is Sabrina's basis in the equipment received?
A) $0.
B) $2,000.
C) $5,000.
D) $6,000.
Equipment
Tangible property used in the operation of a business, such as machinery, computers, and furniture, often subject to depreciation over its useful life.
Current Cash Distribution
Current Cash Distribution refers to the amount of cash distributed to the investors or partners of a business at the present time.
- Familiarize oneself with the tax considerations for cash and property distributions among partners in a partnership.
Verified Answer
KM
Keith MacNeilJun 30, 2024
Final Answer :
B
Explanation :
Sabrina's basis in the partnership interest is reduced first by the cash distribution, leaving $2,000 ($12,000 - $10,000). This remaining basis is then allocated to the basis of the equipment received.
Learning Objectives
- Familiarize oneself with the tax considerations for cash and property distributions among partners in a partnership.
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