Problem 11-42 (LO. 4)

Derek contributed a tract of undeveloped land to the Nightingale Partnership in 2013. He originally paid $20,000 for the property in 2004, but its fair market value was $70,000 at the date of the contribution. In 2015, the partnership distributes another parcel of land to Derek with a basis to the partnership of $30,000. In 2015, the fair market value of the distributed property is $100,000. Derek's basis in his partnership interest is $60,000 immediately before the distribution.

If there is no gain or loss or if an amount is zero, enter "0".

a. Derek recognizes a ______ (gain, loss, no gain/loss) of $_____ on the distribution.

b. Derek's basis in his partnership interest is $________

c. Under the nonliquidating distribution rules, Derek will have a $_______ basis in the property distributed by the partnership.

d. After the distribution, the partnership's basis in the property originally contributed by Derek is $_______.

e. If Derek originally contributed the property to the partnership in 2004, does he recognize any gain or loss on the distribution?

He recognizes a _______ (gain, loss, no gain/loss) of $_______.