In 2002, Carol and Alice formed C&A partnership by contributing cash. Note: neither of them contributed property using Sec. 721. They share profits and losses equally. At the end of 2020, Carols outside basis in her partnership is $160,000. At that time, the partnership distributes an asset to Carol with a fair market value of $80,000 and an adjusted basis of $20,000 (inside basis). Carol is in the 37% tax bracket and does not have any capital gain or losses during the year nor does she have capital loss carryforwards.

Does Carol recognize a gain on loss on this distribution?

What is Carols outside basis following the distribution?

What are the tax consequences to C&A partnership from this distribution?