Problem 1: At the beginning of the tax year, Melodie's basis in the MIP LLC was $55,000, which includes her $40,000 share of the LLC's liabilities. She has a 40% capital and profits interest in the partnership. At the end of the year, MIP distributed to Melodie, in a proportionate nonliquidating distribution, cash of $10,000 and inventory (fair market value of $10,000, basis of $6,000). In addition, MIP repaid $100,000 of its liabilities by the end of the year. 1. The amount of gain or loss the partnership recognizes as a result of this distribution is: a. $0. b. $4,000. C $40,000 d. $44,000 e. none of the above. 2. The amount of gain or loss Melodie recognizes as a result of this distribution is: a $60,000 b. $50,000 C $10,000 d. $0. e. none of the above. 3. Melodie's basis in the inventory she receives as a result of the distribution is: a $10,000 b. $6,000 C. $5,000 d. $0. e. none of the above. Melodie's basis in her partnership interest immediately following the distribution is: a. ($1,000) b. $0. c. $5,000 d $39,000 e none of the above