Melinda's basis for her partnership interest is $250,000 . If she receives a cash distribution of $290,000, her recognized gain is $40,000 and her basis for her partnership interest is reduced to $0 . Melinda is still a partner after the distribution
a. True
b. False
Indicate whether the statement is true or false
True
RATIONALE: The cash distribution reduces Melinda's basis for her partnership interest from $250,000 to $0 ($290,000 – $250,000). She has a $40,000 ($40,000 – $0) recognized gain.
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