Kelly is a 20% partner in KMJ, LLC. She receive a current distribution of $200 cash that reduces her interest in the partnership from 20% to 10%. Kelly’s outside basis in her partnership interest before the distribution is $100, which includes an allocation of $50 of partnership debt. After the distribution, her share of debt will be reduced to $25. What are the tax consequences of the distribution to Kelly?
Kelly is a 20% partner in KMJ, LLC. She receive a current distribution of $200 cash that reduces her interest in the partnership from 20% to 10%. Kelly’s outside basis in her partnership interest before the distribution is $100, which includes an allocation of $50 of partnership debt. After the distribution, her share of debt will be reduced to $25. What are the tax consequences of the distribution to Kelly?
Chapter13: Choice Of Business Entity—general Tax And Nontax Factors/formation
Section: Chapter Questions
Problem 35P
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- Kelly is a 20% partner in KMJ, LLC. She receive a current distribution of $200 cash that reduces her interest in the
partnership from 20% to 10%. Kelly’s outside basis in her partnership interest before the distribution is $100, which includes an allocation of $50 of partnership debt. After the distribution, her share of debt will be reduced to $25. What are the tax consequences of the distribution to Kelly?
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