32. Maria, a 25 percent partner in MARS Partnership, needs a distribution from the partnership for some unexpected bills. The partnership, however, does not have any extra cash to distribute. It will distribute land to Maria that has a value of $27,000 and a basis to the partnership of $50,000.

Maria’s basis in her partnership interest is $55,000.

a. How will this distribution be treated for tax purposes?

b. Assume alternatively, that the partnership sells the land for its fair market value and distributes the cash to Maria. What are the tax consequences of the sale and distribution?

c. Which alternative would you recommend to Maria? Explain.