A is a partner in the ABC cash method partnership, has an outside basis of $10,000. In a pro rata operating distribution to the partners, A receives a parcel of land held as inventory by the partnership with a basis of $2,000 and a value of $3,000 and zero basis accounts receivable with a value of $3,000. Both properties become capital assets in her hands. Six years later, she collects the receivables and sells the parcel for $3,000.

(a) What are the tax consequences to A on the distribution and on the collection of the receivables and the sale of the parcel? What is the justification for the different results?

(b) What result if, immediately after the distribution, A gives the parcel to her daughter D, who promptly sells the parcel for $3,000? Assume the parcel is a capital asset in Ds hand?