Kozar, LLP. has properly elected to file a tax return as a partnership. Kristyn owns a 40% interest and has an outside basis in her partnership interest of $24,000. Louis owns a 60% interest and has an outside basis of $80,000 in his partnership interest. The K-1s attached to Kozar, LLPs 2019 federal income tax return , which is the first year of activity for Kozar, LLP, show the following:

Kristyn Louis

Non-separately stated operating income $8,000 $12,000

Tax exempt municipal bond interest 1,600 2,400

Short term loss on sale of raw land (3,600) ( 5,400)

On December 31, 2019, Kozar, LLP distributes $32,800 in cash to Kristyn to help her pay tuition for the year she will spend in a MAcc program. No distribution is made to Louis, because he already has more than adequate funds to pay his tuition.

a) How is the $32,800 distribution taxed to Kristyn? b) Are there any other 2019 tax issues relating to this distribution that might affect Kristyns personal federal income tax return?