Two years ago, Kimberly became a 30% partner in the KST Partnership with a contribution of investment land with a $10,000 basis and $16,000 fair market value. On January 2 of this year, Kimberly has a $15,000 basis in her partnership interest and none of her pre-contribution gain has been recognized. On January 2, Kimberly receives an operating distribution of a tract of land (not the contributed land) with a $12,000 basis and an $18,000 fair market value.
a. What is the amount and character of Kimberly's recognized gain or loss on the distribution?
b. What is Kimberly's remaining basis in KST after the distribution?
c. What is KST's basis in the land Kimberly contributed after Kimberly receives this distribution?