Audrey and Bill are equal partners in the AB partnership. AB has the following assets:
Adjusted Basis FMV
Cash 120 120
Accounts Receivable 0 60
Inventory 60 60
Land (investment) 240 120
Total 420 360
Audrey’s basis in her partnership interest is $200. Bill’s basis is $150. Audrey and Bill purchased their interests from Cathy and
Denis in separate transactions, without causing a termination of the partnership. The partnership never made a section 754 election.
What is each partner’s gain or loss and basis in the distributed assets if the partnership is liquidated and Audrey and Bill each receives
one-half of each asset?