Lesson: In-kind Distributions to Partners

In this lesson, tackle the intricate rules surrounding in-kind distributions to partners during the complete liquidation of a partner's interest in a partnership. Nick Palazzolo, CPA, unpacks the process of how the basis of the property distributed in-kind is determined—hint: it's the adjusted basis of the partner's interest in the partnership minus any cash distributed. Through a practical example, Nick demystifies why the carryover basis, rather than a stepped-up basis, is used to prevent potential future tax benefits that would result without an actual cash investment. By the end, not only will the calculations make sense, but the rationale behind them will too, ensuring that when it's time to apply this knowledge, it'll feel like second nature.