Question

1. Nupartner purchases a one-third interest in the following three-person equal partnership for $40,000. At the time of the purchase the partnership has the following assets:

A.B                  F.M.V.

Accounts Receivable                                                   $ 0                   $30,000

Land (capital asset)                                                    60,000             90,000

The partnership has made no § 754 election. It immediately distributes $10,000 of receivables to each of the three partners.

1. What result to Nupartner on the collection of the receivables if Nupartner makes no § 732(d) election?
2. What result to Nupartner on the collection of the receivables if he makes a § 732(d) election?
3. If Nupartner elects § 732(d), what is his outside basis immediately after the distribution?
4. Must the partnership approve Nupartner’s election under §732(?
5. Will the § 732(d) election have any immediate effect on the basis of Nupartner’s interest in the land remaining in the partnership?

Answer 1