The KLM Partnership owns the following assets on March 1 of the current year:

a. Which partnership items are unrealized receivables?
b. Is the partnership€™s inventory substantially appreciated?
c. Assume the KLM Partnership has no liabilities and that Kay€™s basis for her partnership interest is $33,750. On March 1 of the current year, Kay receives a $20,000 current distribution in cash, which reduces her partnership interest from one-third to one-fourth. What are the tax results of the distribution (i.e., the amount and character of any gain, loss, or income recognized and Kay€™s basis in her partnership interest)?

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Assets Partnership's Basis FMV Cash S 30,000 S 30,000 Receivables 16,000 Inventory Supplies Equipment 50,000 52,000 6,000 6,500 9.000 10,500 Land (investment) 40.000 65.000 Total S135,000 3The partnership has claimed depreciation of S4,000 on the equipment.