Practical Guide to Partnerships and LLCs—Instructor’s Guide Solutions
Samantha is a forty percent partner in Stevens LLC. Her tax basis in her partnership
interest is $57,000. She received a non-liquidating distribution of real property
(§1231 property to the partnership) with a fair market value of $100,000 and a tax
basis of $65,000. Following the distribution, the partnership had remaining assets as
Real Estate (§1231 Property):
i. Assume the LLC has a §754 election in effect. What will be the amount of the basis
adjustment under §734(b)?
ii. How will the basis adjustment be allocated among the partnership’s remaining
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