Does carol recognize a gain on loss on the distribution

Reference no: EM132748098

Question: In 2002, Carol and Alice formed C&amp;A partnership by contributing cash. Note: neither of them contributed property using Sec. 721. They share profits and losses equally.

At the end of 2020, Carol's outside basis in her partnership is $160,000. At that time, the partnership distributes an asset to Carol with a fair market value of $80,000 and an adjusted basis of $20,000 (inside basis). Carol is in the 37% tax bracket and does not have any capital gain or losses during the year nor does she have capital loss carryforwards.

Does Carol recognize a gain on loss on this distribution?

What is Carol's outside basis following the distribution?

What are the tax consequences to C&A partnership from this distribution?

Reference no: EM132748098

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