Paula and Richard were equal partners in the Brandenburg Partnership on December 31, 2019. On that date, the partnership’s balance sheet was as follows:

		Basis		Fair marketvalue
	Cash	$ 10,000		$ 10,000
	Accounts receivable	—0—		30,000
	Property #1	15,000		25,000
	Property #2	25,000		35,000
		$ 50,000		$ 100,000
	Paula—Capital	$ 25,000		$ 50,000
	Richard—Capital	25,000		50,000
		$ 50,000		$ 100,000

The two properties are §1231 assets to the partnership. The outside basis of each partner’s partnership interest on December 31, 2019 was equal to its inside basis of $25,000. On January 1, 2020, Paula received property #1 in a distribution that reduced her ownership interest in the partnership from one half to one third.

1. Compute the gain or loss recognized by Paula on the distribution.
2. What is the character (ordinary or capital) of Paula’s recognized gain or loss?
3. What is Paula’s basis in Property #1 on January 1, 2020?