2.10 On September 1 of year 1, Partner A contributes Property A to Partnership ABCD....
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2.10 On September 1 of year 1, Partner A contributes Property A to Partnership ABCD. At the time of this contribution, the value of Property A is $420,000 and its adjusted basis in Partner A's hands is $260,000. On December 31 of year 3, the partnership distributes Property A to Partner D in liquidation of her partnership interest, which she obtained at the same time as Partner A for a cash contribution of $420,000. At the time of this distribution, Property A has increased in value to $520,000 and Partner D's outside basis is still $420,000. What are the tax consequences of this distribution to Partner A and Partner D? a) Partner A, $0 gain or loss; Partner D,$0 gain or loss b) Partner A, $160,000 taxable gain; Partner D,$0 gain or loss c) Partner A, $160,000 taxable gain; Partner D, $100,000 taxable gain d) Partner A, $260,000 taxable gain; Partner D,$0 gain or loss
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