Michelle has a basis in her partnership interest of $85,000. In a proportionate liquidating distribution of the partnership, Michelle receives $5,000 cash and a car (a 1231 asset to the partnership) having a basis of $20,000 to the partnership and a fair market value of $30,000. For our purposes, disregard any potential depreciation recapture on the car.

How much loss, if any, may Michelle recognize on the distribution?

A. Michelle recognizes a ? of $.

b.What basis will Michelle take in the car?

Suppose Michelle's 18-year-old son uses the car for his personal use for one year before Michelle sells it for $28,000.

• (1)Does Michelle recognize any gain or loss?
• Michelle recognizes? or ?