1. A partner in a partnership has a basis of $300,000 in her partnership interest. The partnership makes a non- liquidating distribution of the following to the partner.

Property Basis FMV

Cash 100,000 100,000

Unrealized Rec. 35,000 75,000

Equipment 400,000 500,000

1. How much gain do the partner and the partnership recognize on the distribution?
2. What is the basis of the property after the partner receives the distribution?
3. What is the basis in the partnership interest after the distribution?

Use Concept summary 21.4Proportionate non-liquidating distributions to compute your answer.