Example $2--$ Precontribution Gain

In $2020,$ Gabriella contributed investment land with a basis of $$16,000$ and a fmv of $$25,000$ to the Meadowlark partnership in exchange for a $25\%$ interest in capital and profits. In $2026,$ the partnership distributes this property to Juanita, also a $25\%$ partner, in a nonliquidating distribution. The fmv has increased to $$30,000$ at the time the property is distributed. Juanita$$s and Gabriella$$s bases in the partnership interest are each $$40,000$ at the time of the distribution.

a$.$ What are the tax consequences of the distribution to Gabriel and Juanita?

b$.$ What are the consequences to Juanita if she immediately sells the land?

c$.$ How would your answer change if the distribution of the land was made to Juanita in $2029?$