David's basis in the Jimsoo Partnership is $53,000. In a proportionate liquidating distribution, David receives cash of $7,000 and two capital assets: land one with a fair market value of $20,000 and a basis to Jimsoo of $16,000 and land two with a fair market value of $10,000 and a basis to Jimsoo of $16,000. Jimsoo has no liabilities.
a. How much gain or loss will David recognize on the distribution? What is the character of any recognized gain or loss?
b. What is David's basis in the distributed assets?
c. If the two parcels of land had been inventory to Jimsoo, what are the tax consequences to David (amount and character of gain or loss and basis in distributed assets)?