A partnership distributes cash of $20,000 and property with a basis of $10,000 (FMV $15,000) to a partner in a non-liquidating distribution. The partner's outside basis before distribution is $25,000. What is the partner's basis in the property received?

1. Ordering Rule: Cash reduces basis first.<br/>2. Initial Basis: $25,000.<br/>3. Less Cash: $20,000. Remaining Basis = $5,000.<br/>4. Property Basis: Generally carryover ($10,000), BUT limited to remaining outside basis ($5,000).<br/>5. Result: Partner takes $5,000 basis in property. Outside basis becomes $0.