Ebony has a basis in her partnership interest of $85,000. In a proportionate liquidating distribution of the partnership, Ebony 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. Disregard any potential depreciation recapture on the car.

a. How much loss, if any, may Ebony recognize on the distribution?

b. What basis will Ebony take in the car?

c. Suppose Ebony’s 18-year-old son uses the car for his personal use for one year before Ebony sells it for $28,000. How much loss may Ebony recognize on the sale of the car? What tax planning procedures should be considered?