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

Exercise 59

The Taurin Partnership (calendar-year-end) has the following assets as of December 31 of the current year:
On December 31, Taurin distributes $15,000 of cash, $10,000 (FMV) of accounts receivable, and $40,000 (FMV) of inventory to Emma (a 1/3 partner) in termination of her partnership interest.Emma's basis in her partnership interest immediately prior to the distribution is $40,000.?a.What is the amount and character of Emma's recognized gain or loss on the distribution?
?b.What is Emma's basis in the distributed assets?
?c.If Emma's basis before the distribution was $55,000 rather than $40,000, what is Emma's recognized gain or loss and what is her basis in the distributed assets?