1. The adjusted basis of Peter Palmer’s partnership interest is $50,000. In complete liquidation of his interest in the partnership, Peter receives $15,000 in cash, inventory items having an adjusted basis to the partnership of $20,000 and a fair market value of $22,000, and two parcels of land. Parcel I has an adjusted basis to the partnership of $18,000 and a fair market value of $15,000 and Parcel II has an adjusted basis to the partnership of $12,000 and a fair market value of $10,000. What is Peter’s basis in each of the two parcels of land?
a. Parcel 1, $6,000; Parcel 2, $9,000
b. Parcel 1, $3,000; Parcel 2, $12,000
c. Parcel 1, $12,000; Parcel 2, $3,000
d. Parcel 1, $9,000; Parcel 2, $6,000.
2. Gary is a one-third partner in Meadows Partners. His adjusted basis in his partnership interest is $25,000. He received a distribution of real estate in a non-liquidating distribution from the partnership. The real estate had an adjusted basis to the partnership of $20,000 and a fair market value of $50,000. The partnership had no liabilities or hot assets. What will be Gary’s basis in the real property received from the partnership?
a. zero
b. $20,000
c. $25,000
d. $50,000
e. none of the above