Comprehensive Problem 21-61 (LO 21-2, LO 21-3, LO 21-4) (Static) Simon is a 30 percent partner in the SBD Partnership, a calendar-year-end entity. As of the end of this year, Simon has an outside basis in his interest in SBD of $188,000, which includes his share of the $60,000 of partnership liabilities. On December 31, SBD makes a proportionate distribution of the following assets to Simon: Cash Inventory Land Totals Tax Basis $ 40,000 55,000 30,000 FMV $ 40,000 65,000 45,000 $ 125,000 $ 150,000 a1. What are the tax consequences (amount and character of recognized gain or loss) of the distribution to Simon if the distribution is an operating distribution? a2. What are the tax consequences (basis in distributed assets) of the distribution to Simon if the distribution is an operating distribution? b1. What are the tax consequences (amount and character of recognized gain or loss) of the distribution to Simon if the distribution is a liquidating distribution? b2. What are the tax consequences (basis in distributed assets after allocation) of the distribution to Simon if the distribution is a liquidating distribution? Req A1 Req A2 Req B1 Req B2 What are the tax consequences (amount and character of recognized gain or loss) of the distribution to Simon if the distribution is an operating distribution? $40,000 ordinary income and $40,000 capital gains $30,000 ordinary income and $55,000 capital gains $55,000 ordinary income and $30,000 capital loss $30,000 ordinary loss and $63,000 capital gains Neither gain nor loss recognized