Heather sells land (adjusted basis, $75,000; fair market value, $85,000) to a partnership in which she controls an 80% capital interest. The partnership pays her only $50,000 for the land. a. How much loss does Heather realize and recognize? b. If the partnership later sells the land to a third party for $80,000, how much gain does that partnership realize and recognize?

Income Tax Fundamentals 2020
38th Edition
ISBN:9780357391129
Author:WHITTENBURG
Publisher:WHITTENBURG
Chapter10: Partnership Taxation
Section: Chapter Questions
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Heather sells land (adjusted basis, $75,000; fair market value, $85,000) to a partnership in which she controls an 80% capital interest. The partnership pays her only $50,000 for the land.

a. How much loss does Heather realize and recognize?

b. If the partnership later sells the land to a third party for $80,000, how much gain does that partnership realize and recognize?

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