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# Partnerships-Distributions, sales, and Exchanges

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Mark, Pete and Mickey are equal partners in the 2MP Partnership. At the beginning of the year, Mark's basisin his partnership interest was \$15,000, Pete's basis was \$10,000, and Mickey's basis was \$20,000. The partnership reported taxable income of \$30,000 (allocated equally among the partners). At year end, the partnership made a non-liquidating distribution of \$25,000 cash to Pete.

a. how much gain must Pete recognize on receipt of the cash distribution?

b. what will be his remaining basis in his partneship interest?

#### Solution Preview

Question a
Compute Pete's basis before distribution
Net income/ 3 = 30,000/3 = 10,000
New basis = 10,000+10,000=20,000

Gain: cash distribution - basis = ...

#### Solution Summary

In this solution, distributions, sales and exchanges are examined for an equal partnership between Mark, Pete and Mickey. Step by step calculations are given.

\$2.19