Practical Guide to Partnerships and LLCs—Instructor’s Guide Problems
Chapter 12 – Partnership Distributions
How are “advances or drawings of money or property against a partner’s
distributive share of income” treated?
W is a partner in the equal WXYZ partnership.
At the beginning of the year, his
basis in his partnership interest is $40,000.
On Feb. 1, W takes a draw against
earnings of $30,000.
On June 1, the partnership pays off $60,000 of debt.
Sept. 1, W gets a distribution of cash of $30,000 that is not a draw against
The partnership’s income from the year is $200,000.
What is the effect
of each of these items on W’s basis?
A is a partner in the equal ABC partnership, and is distributed a note from the
partnership for $30,000, payable by the partnership.
A then sells the note for
$27,000. A’s basis in the partnership when the note was distributed was $25,000.
What are the tax effects to A?
What would the tax effects have been if A was just
distributed $30,000 cash instead?
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?
© 2019 CCH Incorporated and its affiliates. All rights reserved.