Justin and Lauren are equal partners in the PJenn Partnership. The partners formed the partnership seven years ago by contributing cash. Prior to any distributions, the partners have the following bases in their partnership interests:

Partner...............Outside Basis

Justin........................$ 22,000

Lauren........................22,000

On December 31 of the current year, the partnership makes a pro-rata operating distribution of:

PartnerDistribution

JustinCash...............$ 25,000

LaurenCash..................18,000

Property.......................7,000 (FMV) ($2,000 basis to partnership)

a. What is the amount and character of Justin's recognized gain or loss?

b. What is Justin's remaining basis in his partnership interest?

c. What is the amount and character of Lauren's recognized gain or loss?

d. What is Lauren's basis in the distributed assets?

e. What is Lauren's remaining basis in her partnership interest?