Select the best answer The Smith Jones and Johnson Partnersh

Select the best answer. The Smith, Jones and Johnson Partnership owns three pieces of land, each having a basis of $10,000 and a fair market value (FMV) of $22,000. On July 1, of the current year, Doe purchases Johnson\'s one-third interest for its FMV of $22,000. No Section 754 election is made. Within two years of purchase, Doe\'s interest is liquidated by distributing one of the parcels of land to Doe. Based on this information, which of the following statements is the most true? A. ASection 732(d) election would give Doe a basis of $22,000 instead of $10,000. B. Doe is not eligible for a Section 732(d) election. C. Johnson must make a Section 732(d) election before leaving the partnership. D. The partners must unanimously agree to make a Section 732(d)election.

Solution

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Option A section 732(d) electipon would give Doe a basis of $22000 instead of $10000

As per section 732 (d) if the partner acquired his interest by a transfer to which section 754 does not apply and the distribution is property other than cash is made with respect to this transferred property within two years after such transfer than he could elect to treat adjusted basis of property as his partnership basis