McGraw-Hill's Taxation of Business Entities 3rd Edition by Connie Weaver, Brian Spilker, Edmund Outslay, John Robinson, Ronald Worsham, Benjamin Ayers, John Barrick

Exercise 3

Coy and Matt are equal partners in the Matcoy Partnership. Each partner has a basis in his partnership interest of $28,000 at the end of the current year, prior to any distribution. On December 31, they each receive an operating distribution. Coy receives $10,000 cash. Matt receives $3,000 cash and a parcel of land with a $7,000 fair market value and a $4,000 basis to the partnership. Matcoy has no debt or hot assets.
a. What is Coy's recognized gain or loss What is the character of any gain or loss
b. What is Coy's ending basis in his partnership interest
c. What is Matt's recognized gain or loss What is the character of any gain or loss
d. What is Matt's basis in the distributed property
e. What is Matt's ending basis in his partnership interest