Question
Three partners, A, B, and C each own a one-third interest in a partnership with $900,000 in assets (FMV) with a basis of 1.5 million.
Three partners, A, B, and C each own a one-third interest in a partnership with $900,000 in assets (FMV) with a basis of 1.5 million. Each of the three partners has a basis of $500,000 in the partnership. Partner C decides to sell his ownership stake to new Partner D for $300,000 (taking a $200,000 loss versus his original basis of $500,000). The partnership has no optional basis in effect. Later the partnership sells half of its assets for $450,000 in cash and distributes the proceeds. What effect will this transaction have on Partner A and D's cost basis in the partnership?
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