Zoe’s entire interest in a cash-method partnership is terminated by means of the following liquidating distribution: (i) $70 of cash, (ii) inventory with a tax basis of $50 and a value of $60, and (iii) land with a tax basis of $30 and a value of $50. Assume that the partnership has held the land for many years.

1. What is the basis of the land in Zoe’s hands after the distribution if her outside basis was $300 at the time of the distribution?

2. What are the tax consequences if Zoe receives only the cash and inventory (the land was not distributed to her) and her outside basis was $300 at the time of the distribution?

3. Assume that Zoe receives the cash, inventory and land in the distribution.  What is Zoe’s basis in the inventory and the land after the distribution if Zoe’s outside basis was $140 at the time of the distribution?