Liquidating distribution detailed example

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If you sold your partnership interest for ,000, you would recognize a gain of ,000, whereas your partner, if she sold at the same price, would recognize no gain.

Losses are only recognized in a liquidating distribution that consists of money, unrealized receivables, or inventory.So if a partner contributed property, with a holding period of 1 year, to the partnership, and the partnership held the property for 2 years, then a distribution of that property to another partner would result in a carryover holding period of 3 years to the receiving partner.If several properties are distributed to a partner, then basis must be allocated to the individual properties.If there is any excess basis over the partnership's interest, then the assigned bases must be reduced by the excess.Any remaining allocable basis is then assigned to the remaining properties, reduced by any excess basis over the partner's remaining interest.

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