19Instructor’s Manualc.Clay's remaining basis in his partnership interest will be $7,000 ($25,000 pre-distribution basis in partnership interest less $18,000 tax basis in property receivedin the distribution).Cash Distribution in Partial Liquidation of Partner's Interest—Consequences to RecipientPartner33.a.None.b.$5,000 ($30,000 pre-distribution tax basis in partnership interest less $25,000 cashdistribution received).c.The distribution will reduce her economic interest in the partnership from 33% to20%. To illustrate, Susan owned $2 of every $6 in partnership assets prior to thedistribution (one-third). The distribution reduces her interest in the partnership, butit also reduces the partnership's remaining assets. Thus, her economic interest (i.e.,percentage interest) in the partnership will not be reduced by half (because boththe numerator and the denominator are changing). In this case, presumably, shereceived $1 of every $6 of partnership assets in the distribution. Thus, followingthe distribution, she should own $1 of every $5 in remaining partnership assets,leaving her with a 20% interest in the partnership.Excess Cash Distribution in Partial Liquidation of Partner's Interest—Consequences toRecipient Partner34.a.$15,000—even though the distribution redeems half his interest in the partnership, it is applied against his aggregate basis in his partnership interest. Accordingly, he recognizes gain in an amount equal to the excess of the cash distribution over his basis in the entire partnership interest.b.Zero."Excess" Property Cash Distribution in Partial Liquidation of Partner's Interest—Consequences to Recipient Partner35.a.No.b.Ordinarily, he would take a carryover basis of $48,000 in the property received inthe distribution. However, his tax basis in the property received will be limited tohis tax basis in the partnership interest just prior to receipt of the distribution.Thus, in this case, he will take a tax basis in the distributed property equal to$40,000.