1.Partner X is distributed the following in complete liquidation of her partnership interest:

Basis FMV

Cash $30,000 $30,000

Inventory $30,000 $40,000

Land A $35,000 $20,000

$95,000 $90,000

X had a basis in her partnership interest of $75,000, so the lands basis was reduced $20,000 and had only a $15,000 basis in Xs hands. The remaining YZ partnership (which did have a Code Sec. 754 election in effect) had the following remaining assets:

Basis FMV

Cash $40,000 $40,000

Inventory $30,000 $45,000

Unrealized Receiv. $50,000 $45,000

Land B $25,000 $40,000

Building $45,000 $10,000

i.How much of an adjustment to basis would each of the partnership assets have?

ii. How much of an adjustment to basis would each of the partnership assets have if Xs basis in her partnership interest had been $140,000?