Jack Has a Basis in a Partnership Interest of $300,000

Multiple Choice

Jack has a basis in a partnership interest of $300,000, including his $80,000 share of partnership debt. At the end of the current year, the partnership pays off its liabilities and makes a proportionate current (nonliquidating) distribution to its partners. Jack receives a parcel of land (partnership basis = $120,000, value = $135,000) and inventory (partnership basis = $160,000, value = $180,000) . Following the distribution, what is Jack's basis in the land, inventory, and the partnership interest?

A) $120,000 basis in land, $160,000 basis in inventory, $20,000 basis in partnership interest.
B) $40,000 basis in land, $180,000 basis in inventory, $0 basis in partnership interest.
C) $60,000 basis in land, $160,000 basis in inventory, $0 basis in partnership interest.
D) $135,000 basis in land, $165,000 basis in inventory; $0 basis in partnership interest.
E) $60,000 basis in land, $160,000 basis in inventory; $80,000 basis in partnership interest.