Question

Two years ago, Kimberly became a 30 percent partner in the KST Partnership with a contribution of investment land with a $16,000 basis and a $24,400 fair market value. On January 2 of this year, Kimberly has a $22,200 basis in her partnership interest and none of her pre-contribution gain has been recognized. On January 2 Kimberly receives an operating distribution of a tract of land (not the contributed land) with a $19,800 basis and an $28,200 fair market value.

b. What is Kimberly’s remaining basis in KST after the distribution?

Basis:

c. What is KST’s basis in the land Kimberly contributed after Kimberly receives this distribution?

Basis:

Answer 1

ANSWER
b)
This is to be noted that of partner recors a gain on account of pre-contribution then this will increase the outside basis of the partner. The calculation make it more clearer:
Basis of Partnership	$ 22,200
Add : Gain	$ 6,000
Less : Carryovers basis	($ 19,800)
	$ 8,400
Therefore Kimberly's basis is $ 8400 ($ 22,200 + $ 6,000 - $ 19,800)
c)
The calculation as required in the quiestion is as under :
Contribution :	$ 16,000
Add : kimberly' s gain	$ 6,000
	$ 22,000
This pionts to the fact that the partner's gain incresese the partnership's basis that would arise as per -contribution gain.