Kathy is a 25 percent partner in the KDP Partnership and receives a parcel of land with a fair value of $168,000 (inside basis of $136,000) in complete liquidation of her partnership interest. Kathy's outside basis immediately before the distribution is $218,000. KDP currently has a 754 election in effect and has no hot assets or liabilities. What is KDP's special basis adjustment from the distribution?

Multiple Choice

• $0.

• $32,000 positive basis adjustment.

• $82,000 positive basis adjustment.

• $82,000 negative basis adjustment.

At the end of last year, Cynthia, a 20 percent partner in the five-person CYG partnership, has an outside basis of $25,500, including her $11,000 share of CYG debt. On January 1 of the current year, Cynthia sells her partnership interest to Roger for a cash payment of $18,500 and the assumption of her share of CYG's debt. CYG has no hot assets. What is the amount and character of Cynthia's recognized gain or loss on the sale?

Multiple Choice

• $7,000 capital loss.

• $7,000 ordinary loss.

• $4,000 capital gain.

• $7,500 ordinary income.

Tyson is a 25 percent partner in the KT Partnership. On January 1, KT makes a proportionate distribution of $16,000 cash, inventory with a $10,000 fair value (inside basis $4,000), land A with a fair value of $8,000 (inside basis of $12,000), and land B with a fair value of $6,000 (inside basis of $4,000) to Tyson. KT has no liabilities at the date of the distribution. Tyson's basis in his KT Partnership interest is $23,000. What is Tyson's basis in the distributed inventory, land A, and land B?

Multiple Choice

• $10,000 inventory, $8,000 land A, $6,000 land B.

• $4,000 inventory, $12,000 land A, $4,000 land B.

• $0 inventory, $2,857 land A, $143 land B.

• $4,000 inventory, $2,000 land A, $1,000 land B.