Michelle pays $120,000 cash for Brittanys one-third interest in the Westlake Partnership. Just prior to the sale, Brittanys basis in Westlake is $96,000. Westlake reports the following balance sheet:

Assets: Tax Basis FMV

Cash $ 96,000 $ 96,000

Land 192,000 264,000

Totals $ 288,000 $ 360,000

Liabilities and capital:

Capital Amy 96,000

Brittany 96,000

Ben 96,000

Totals $ 288,000

a. What is the amount and character of Brittanys recognized gain or loss on the sale?

b. What is Michelles basis in her partnership interest? What is Michelles inside basis?

c. If Westlake were to sell the land for $264,000 shortly after the sale of Brittanys partnership interest, how much gain or loss would the partnership recognize?

d. How much gain or loss would Michelle recognize?

e. Suppose Westlake has a 754 election in place. What is Michelles special basis adjustment? How much gain or loss would Michelle recognize on a subsequent sale of the land in this situation?