Sally is a 25% partner in the STUV partnership. She has a tax basis in her partnership interest of $300,000. Sally also owns some land and a small building that she would like to sell to the partnership. The property has a fair market value of $500,000. Sally purchased the building for $400,000, and after taking MACRS deductions, her tax basis in the building is $350,000.

1. Sallys lawyer, who has a basic understanding of tax law, suggests that Sally contribute the building to the partnership, and subsequently take a distribution of $500,000 from the partnership. Assuming the form of this transaction is respected by the IRS, how much taxable income will Sally recognize?