Assume each of the questions below are independent and have no relationship to each other, unless specifically noted:

1) On 1-1-17, Partner E receives Land Parcel 1 and $15k of cash in complete liquidation of his interest in RealtiCo. E's tax basis in the distributed land is: $___________.

2) Assuming the partnership has a valid IRC Section 754 election in place, the overall Section 734(b) adjustment to the inside tax basis of partnership assets upon the distribution in 1) will be: $___________ (be specific as to positive or negative amounts)

3) The overall adjustment computed in 2) will be allocated to the remaining partnership assets under the provisions of which Internal Revenue Code Section: §___________.

4) On 1-1-17, Partner H receives Land Parcel 4 and $10k of cash as a current (non-liquidating) distribution. H's tax basis in the distributed land is: $___________.

5) H's outside tax basis in RealtiCo after the distribution in 4) is: $____________.

6) Assuming the partnership has a valid IRC Section 754 election in place, the IRC Section 734(b) adjustment resulting from the distribution in 4) will be: $___________ (be specific as to positive or negative amounts).

7) On 1-1-17, J acquires G's interest for $37,500 in cash. G's gain upon the sale is $___________.

8) True or False: J would likely be in favor of having the partnership make a Section 754 election (if it didn't already have one in place).

9) If a Section 754 election was made (or already existed), the adjustment resulting from J's purchase in 7) would be: $___________ (be specific as to positive or negative amounts)

1. On 1-1-17, Partner E receives Land Parcel 1 and $15k of cash in complete liquidation of his interest in RealtiCo. E's tax basis in the distributed land is: $___________.

E's outside basis in Realtico = $47,500

(-) Cash distribution received by E= $15,000

Balance= $32,500

E's basis in Land Parcel 1 = $50,000-$32,500 = $17,500

2. Assuming the partnership has a valid IRC Section 754 election in place, the overall Section 734(b), adjustment to the inside tax basis of partnership assets upon the distribution in 1) will be: $___________ (be specific as to positive or negative amounts)

Land Parcel 1 basis before distribution = $50,000

Basis after distribution = $47,500

Therefore, there is a decrease of $2,500 in the basis after distribution. This implies that there should be a $2,500 decrease in the basis via distribution. 

3. The overall adjustment computed in 2) will be allocated to the remaining partnership assets under the provisions of which Internal Revenue Code Section: §___________.

Answer: These will be under Section 734(b) of IRC.

(Some parts of the solution has been blurred due to privacy protection policy)