Practical Guide to Partnerships and LLCs—Instructor’s Guide Problems
Chapter 12 – Partnership Distributions
If a partner is distributed encumbered property, what is the ordering in time of the
following for tax purposes:
(1) the assumption of the debt by the distributee
partner, (2) the reduction in the distributee partner’s share of the partnership debt,
and (3) the distribution of the property?
Partner D of the equal DEF partnership has a basis in her partnership interest of
The partnership distributes property to her with a FMV = $102,000, basis
= $90,000, and an associated liability of $72,000. What is her basis in the
partnership and the property after the distribution?