Fundamentals of Taxation 2011 4th Edition by Ana Cruz, Debra Prendergast, Dan Schisler, Michael Deschamps

Exercise 23

Katlin contributes land to a partnership with a basis of $44,000 and a FMV of $56,000 in 2007. In 2009, when the FMV of the land is $58,000, the partnership distributes the land to Baily, another partner. Which of the following is true? a. Katlin recognizes no gain or loss.
B) Baily recognizes a gain of $14,000.
C) Katlin recognizes a gain of $12,000.
D) Baily has a basis of $58,000 in the land.