Question: Please explain step by step Kathy is a 25 percent partner in the KDP Partnership and receives a parcel of land with a fair value

Please explain step by step

Kathy is a 25 percent partner in the KDP Partnership and receives a parcel of land with a fair value of $165,000 (inside basis of $130,000) in complete liquidation of her partnership interest. Kathy's outside basis immediately before the distribution is $215,000. KDP currently has a 754 election in effect and has no hot assets or liabilities. What is KDP's special basis adjustment from the distribution? Multiple Choice

$0.

$35,000 positive basis adjustment.

$85,000 positive basis adjustment.

$85,000 negative basis adjustment.

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