Holly’s tax basis in her one-third partnership interest is $30,000, consisting of her $20,000 net capital investment in the partnership, plus her $10,000 share of partnership liabilities. In complete liquidation of this interest, Holly receives a distribution of real property with a tax basis of $28,000 and a fair market value of $50,000. The property is encumbered by a $15,000 mortgage for which Holly assumes responsibility. The partnership has no hot assets. What will be Holly’s tax basis in the real property?

a) $28,000

b) $30,000

c) $50,000

d) $35,000

e) none of the above

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