Question: Jamies basis in her partnership interest is $52,000. In a proportionate distribution in liquidation of the partnership, Jamie receives $2,000 cash and two parcels of

Jamie’s basis in her partnership interest is $52,000. In a proportionate distribution in liquidation of the partnership, Jamie receives $2,000 cash and two parcels of land with bases of $10,000 and $20,000, respectively, to the partnership. The partnership holds both parcels of land for investment, and the parcels have fair market values of $20,000 each.

a. How much gain or loss, if any, must Jamie recognize on the distribution?

b. What basis will Jamie take in each parcel?

c. If the land had been held as inventory by the partnership, what effect, if any, would it have on your responses to (a) and (b)?

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