Understanding the tax implications of a property is crucial in determining its non-liquidating basis (cost of the property), especially in partnerships or corporations. Here's a shortened explanation:

The basis of property distributed to a partner in a non-liquidating distribution by a partnership is typically less than:

• The property's adjusted basis as a partnership, or
• Adjusting for any cash received, the partner's outside basis (partner's interest in a partnership) in the partnership.

This assures that the partner's total basis in the partnership and the distributed property is not greater than the original outside basis.

The FMV of property distributed by a corporation to its shareholders that are not liquidating is established at the time of distribution. The corporation can make a profit if the FMV exceeds the adjusted basis of the property.

Here is an example to explain for partnership nonliquidating distribution: Partnerner's basis in the property.

•  "S" had interest in the partnership was $15,000.
• "S" receives a cash distribution of $6,000.
• "S" adjusted bais in the property is $11,000
• What is the basis of the distributed property in "S" hands?

Generally, distributions, which include dividends, decrease a partner's basis in their partnership interest. If a partner receives a distribution, it is subtracted from their outside basis. If the distribution surpasses the partner's basis, the excess amount is treated as a gain and is typically taxable. Thus, "S" basis in the partnership is $9,000 9$15,000 - $6,000). The basis  

The basis for distributing property to a partner is the adjusted basis of the property to the partnership right before distribution. The adjusted basis of the partner's interest in the partnership, including any money or distribution received, cannot be exceeded by this basis.

Therefore, the's' basis in the property is $9,000 ($15,000 - $6,000).