Owen's tax basis in Regal Partnership was $18,000 at the time Owen received a nonliquidating distribution of $3,000 cash and land with an adjusted basis of $7,000 to Regal and a fair market value of $9,000. Regal did not have unrealized receivables, appreciated inventory, or properties that had been contributed by its partners. Disregarding any income, loss, or any other partnership distribution for the year, what was Owen's tax basis in Regal after the distribution?
　　a. $7,000
　　b. $8,000
　　c. $9,000
　　d. $6,000
　　Answer:B
　　Choice "b" is correct. In a nonliquidating distribution, the partner's basis is reduced first by the amount of cash received and then by the adjusted basis of any property received. Thus, Owen's basis after the distribution is determined as follows:
　　Owen's beginning basis $ 18,000
　　Cash received (3,000)
　　Basis of property received (7,000)
　　Owen's adjusted basis after the distribution $ 8,000
　　Choices "c", "a", and "d" are incorrect, per the above explanation.