1. Randy owns a one-fourth capital and profits interest in the calendar-year RUSR Partnership. His adjusted basis for his partnership interest was $200,000 when he received a proportionate nonliquidating distribution of the following assets:

Partnership’s Basis in Asset Asset’s Fair Market Value

Cash $120,000 $120,000

Inventory 60,000 90,000

a. Calculate Randy’s recognized gain or loss on the distribution, if any. Explain.

b. Calculate Randy’s basis in the inventory received.

c. Calculate Randy’s basis for his partnership interest after the distribution.

2. Karli owns a 25% capital and profits interest in the calendar-year KJDV Partnership. Her adjusted basis for her partnership interest on July 1 of the current year is $200,000. On that date, she receives a proportionate nonliquidating distribution of the following assets:

a. Calculate Karli’s recognized gain or loss on the distribution, if any.

b. Calculate Karli’s basis in the inventory received.

c. Calculate Karli’s basis in land received. The land is a capital asset.

d. Calculate Karli’s basis for her partnership interest after the distribution.

3. Melissa is a partner in a continuing partnership. At the end of the current year, the partnership makes a proportionate, nonliquidating distribution to Melissa of $50,000 cash, inventory (basis of $22,000, fair market value of $20,000), and land (basis of $30,000, fair market value of $60,000). Melissa’s basis in the partnership interest was $90,000 before the distribution. What is Melissa’s basis in the inventory, land, and partnership interest following the distribution?

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4. In a proportionate nonliquidating distribution of his 30% interest in the MNO LLC, Neil received cash ($60,000), land (basis of $40,000 and value of $75,000), and unrealized receivables (basis of $0 and value of $22,000). In addition, Neil is relieved of his $40,000 share of the LLC’s liabilities. Neil’s basis in MNO (including his share of LLC liabilities) was $80,000 immediately prior to this distribution.

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