In the current year, Sue received a liquidating distribution of real estate from UTSRQ Partnership, a general partnership. The real estate had an adjusted basis to the partnership of $35,000 and a fair market value of $90,000 on the date of the distribution. Sue’s adjusted basis in her 20 percent interest in UTSRQ Partnership was $50,000. How much gain or loss did Sue recognize on receipt of the distribution and what is her basis in the real estate?
a. 0 gain or loss recognized and a $50,000 basis in the real estate.
b. ($15,000) loss recognized and a $35,000 basis in the real estate.
c. 0 gain or loss recognized and a $35,000 basis in the real estate.
d. $40,000 gain recognized and a $90,000 basis in real estate.
e. $15,000 gain recognized and a $50,000 basis in real estate.