Williams Brother Partnership had the following balance sheets at December 31: All three properties owned by the

Williams Brotherŝ Partnership had the following balance sheets at December 31:

All three properties owned by the partnership are investment properties. On December 31 , the partnership distributed property 3 to Matt, reducing his interest in the partnership from one-third to one-seventh.

a. Will Matt recognize any gain or loss in connection with this distribution?

b. What will be Matt's tax basis in property 3 received from the partnership?

c. What will be Matt's remaining tax basis in his partnership interest?

Transcribed Image Text:

Cash Property 1 Property 2 Property 3 TOTAL ASSETS Liabilities Capital, Matt Capital, Justin Capital, Jeff TOTAL LIABILITIES & CAPITAL Basis 30,000 103,000 114,000 32,000 279,000 126,000 51,000 51,000 51,000 279,000 FMV 30,000 151,000 120,000 50,000 351,000 126,000 75,000 75,000 75,000 351,000