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X is a one-third partner in the XYZ partnership. Partner X is distributed the following...

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Accounting

X is a one-third partner in the XYZ partnership. Partner X is distributed the following in complete liquidation of her partnership interest:
Basis FMV
Cash $20,000 $20,000
Inventory $40,000 $50,000
Land A $35,000 $30,000
$95,000 $100,000
X had a basis in her partnership interest of $85,000. The remaining YZ partnership had the following remaining assets:
Basis FMV
Cash $40,000 $40,000
Inventory $30,000 $50,000
Unrealized Receiv. $50,000 $50,000
Land B $30,000 $35,000
Building $45,000 $25,000
The partnership has a Section 754 election in effect.
1. Describe the tax consequences to Partner X of the liquidating distribution. What is the amount and character of any gain or loss recognized? What is Xs basis in the assets received?
2. How much of an adjustment to basis would each of the partnership assets have?

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