In 2007, Gabriella contributed land with a basis of $16,000 and a fair market value of $25,000 to the Meadowlark Partnership in exchange for a 25% interest in capital and profits. In 2010, the partnership distributes this property to Juanita, also a 25% partner, in a nonliquidating distribution. The fair market value has increased to $30,000 at the time the property is distributed. Juanita's and Gabriella's bases in their partnership interests are each $40,000 at the time of the distribution.
a. How much gain or loss, if any, does Gabriella recognize on the distribution to Juanita? What is Gabreilla's basis in her partnership interest following the distribution?
b. What is Juanita's basis in the land she received in the distribution?
c. How much gain or loss, if any, does Juanita recognize on the distribution? What is Juanita's basis in her partnership interest following the distribution?
d. How much gain or loss would Juanita recognize on the distribution? What is Juanita's basis in her partnership interest following the distribution?
e. Would your answers to (a) and (b) change if Gabriella originally contributed the property to the partnership in 1999?