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20 February, 03:44

Jenny has a $51,400 basis in her 50 percent partnership interest in the JM Partnership before receiving any distributions. This year JM makes a proportionate operating distribution to Jenny of a parcel of land with an $84,500 fair value and a $60,300 basis to JM. The land is encumbered with a $28,150 mortgage (JM's only liability). What is Jenny's basis in the land and her remaining basis in JM after the distribution?

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  1. 20 February, 06:58
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    Jenny's basis in the land is $65,475 and her remaining basis in JM after the distribution is $5,175 respectively

    Explanation:

    The computations are shown below:

    For jenny basis in the land:

    = 50% Jenny basis + encumbered land value * partnership interest

    = $51,400 + $28,150 * 50%

    = $51,400 + $14,075

    = $65,475

    Now the remaining basis would be

    = Jenny basis in the land - basis to JM

    = $65,475 - $60,300

    = $5,175

    All other information which is given is not relevant. Hence, ignored it
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