Travis and Alix Weber are equal partners in the Tralix partnership, which does not have a §754 election in place. Alix sells one-half of her interest (25%) to Michael Tomei for $30,000 cash. Just before the sale, Alix's basis in her entire partnership interest is $75,000 including her $30,000 share of the partnership liabilities. Tralix's assets on the sale date are as follows:
.......................................Basis..................Fair Market Value
Cash..............................$ 40,000.................................$ 40,000
Inventory..........................30,000...................................90,000
Land held for investment......80,000...................................50,000
Totals...........................$ 150,000..............................$ 180,000
a. What is the amount and character of Alix's recognized gain or loss on the sale?
b. What is Alix's basis in her remaining partnership interest?
c. What is Michael's basis in his partnership interest?
d. What is the effect of the sale on the partnership's basis in the assets