John and Lynn are equal partners in the Pony Partnership. The partners formed the partnership seven years ago by contributing cash. Prior to any distributions, the partners have the following bases in their partnership interests:

Partner | Outside Basis

John | $ 22,000

Lynn | 22,000

On December 31 of the current year, the partnership makes a pro-rata operating distribution of:

Partner | Distribution

John | Cash $ 25,000

Lynn | Cash 18,000

Property | 7,000 (FMV) ($2,000 basis to partnership)

a. What is the amount and character of Johns recognized gain or loss?

b. What is Johns remaining basis in his partnership interest?

c. What is the amount and character of Lynns recognized gain or loss?

d. What is Lynns basis in the distributed assets?

e. What is Lynns remaining basis in her partnership interest?