Consider each of the following independent situations, and answer the following questions.

a. For each fact pattern, indicate:

• Whether the partner recognizes gain or loss.
• Whether the partnership recognizes gain or loss.
• The partner's adjusted basis for the property distributed, if applicable.
• The partner's outside basis in the partnership after the distribution.

In each case, assume that the partnership owns no hot assets. If an amount is zero, enter "0".

(1) Kim receives $20,000 cash in partial liquidation of her interest in the partnership. Kim's outside basis for her partnership interest immediately before the distribution is $3,000.

Does Kim recognize a gain or loss as a result of this distribution? Kim recognizes of $fill in the blank 9d8ca5085018072_2.

Does the partnership recognize a gain or loss as a result of this distribution? The partnership recognizes of $fill in the blank 9d8ca5085018072_4.

Kim's outside basis for her partnership interest after the distribution is $fill in the blank 9d8ca5085018072_5.

(2) Kourtni receives $40,000 cash and land with an inside basis to the partnership of $30,000 (fair market value of $50,000) in partial liquidation of her interest. Kourtni's outside basis for her partnership interest immediately before the distribution is $80,000.

Does Kourtni recognize a gain or loss as a result of this distribution? Kourtni recognizes of $fill in the blank 9d8ca5085018072_7.

Does the partnership recognize a gain or loss as a result of this distribution? The partnership recognizes of $fill in the blank 9d8ca5085018072_9.

Kourtni's basis in the land is $fill in the blank 9d8ca5085018072_10.

Her outside basis for her partnership interest is reduced to $fill in the blank 9d8ca5085018072_11.

(3) Kourtni receives $40,000 cash and land with an inside basis to the partnership of $30,000 (fair market value of $50,000) in partial liquidation of her interest. Kourtni's outside basis for her partnership interest immediately before the distribution is $60,000.

Does Kourtni recognize a gain or loss as a result of this distribution? Kourtni recognizes of $fill in the blank 9d8ca5085018072_13.

Does the partnership recognize a gain or loss as a result of this distribution? The partnership recognizes of $fill in the blank 9d8ca5085018072_15.

Kourtni's basis in the land received is $fill in the blank 9d8ca5085018072_16.

Her outside basis for her partnership interest after the distribution is $fill in the blank 9d8ca5085018072_17.

(4) Klois receives $50,000 cash and inventory (basis of $30,000, fair market value of $50,000) in partial liquidation of her partnership interest. Her basis was $90,000 before the distribution. All partners received proportionate distributions.

Does Klois recognize a gain or loss as a result of this distribution? Klois recognizes of $fill in the blank 9d8ca5085018072_19.

Does the partnership recognize a gain or loss as a result of this distribution? The partnership recognizes of $fill in the blank 9d8ca5085018072_21.

Klois's basis in the inventory is $fill in the blank 9d8ca5085018072_22.

Her outside basis for her partnership interest after the distribution is $fill in the blank 9d8ca5085018072_23.

b. For fact patterns (1) to (4) in part (a) above, are additional planning opportunities available to the partnership to maximize its inside basis in its assets? If so, by how much can the basis be increased? What is the effect of any basis increase to the distributee partner or the other partners?

The might make an election under 754 to adjust the basis of assets. Because these adjustments relate to , if a 754 election is made, the basis is allocated to the .

(1) Kim receives $20,000 cash in partial liquidation of her interest in the partnership. Kim's outside basis for her partnership interest immediately before the distribution is $3,000.

If a 754 election is made, the partnership would its basis in remaining partnership assets by $fill in the blank 6f2df3fc4012fd0_7.

(2) Kourtni receives $40,000 cash and land with an inside basis to the partnership of $30,000 (fair market value of $50,000) in partial liquidation of her interest. Kourtni's outside basis for her partnership interest immediately before the distribution is $80,000.

A 754 election be made because the land's basis Kourtni in the distribution.

(3) Kourtni receives $40,000 cash and land with an inside basis to the partnership of $30,000 (fair market value of $50,000) in partial liquidation of her interest. Kourtni's outside basis for her partnership interest immediately before the distribution is $60,000.

If a 754 election is made, the partnership would its basis in partnership assets by $fill in the blank 6f2df3fc4012fd0_11 to reflect the of the asset's basis in the hands of the partner.

(4) Klois receives $50,000 cash and inventory (basis of $30,000, fair market value of $50,000) in partial liquidation of her partnership interest. Her basis was $90,000 before the distribution. All partners received proportionate distributions.

A 754 election be made because was recognized.