Matt Receives a Proportionate Nonliquidating Distribution

Multiple Choice

Matt receives a proportionate nonliquidating distribution. At the beginning of the partnership year, the basis of his partnership interest is $60,000. During the year, he received a cash distribution of $25,000 and a property distribution (basis of $20,000 and fair market value of $12,000) . In addition, Matt's share of partnership liabilities was reduced by $20,000 during the year. How much gain or loss does Matt recognize; what is his basis in the property he received; and what is his remaining basis in the partnership interest?

A) $3,000 loss; $12,000 basis in property; $0 remaining basis.
B) $0 gain or loss; $15,000 basis in property; $0 remaining basis.
C) $0 gain or loss; $20,000 basis in property; $15,000 remaining basis.
D) $0 gain or loss; $12,000 basis in property; $23,000 remaining basis.
E) $5,000 gain; $20,000 basis in property; $0 remaining basis.