The Taurin Partnership (calendar-year-end) has the following assets as of December 31 of the current year:

.......................................Tax Basis........................FMV

Cash.................................$ 45,000......................$ 45,000

Accounts receivable.................15,000.......................30,000

Inventory..............................81,000.....................120,000

Totals..............................$ 141,000...................$ 195,000

On December 31, Taurin distributes $15,000 of cash, $10,000 (FMV) of accounts receivable, and $40,000 (FMV) of inventory to Emma (a 1/3 partner) in termination of her partnership interest. Emma's basis in her partnership interest immediately prior to the distribution is $40,000.

a. What is the amount and character of Emma's recognized gain or loss on the distribution?

b. What is Emma's basis in the distributed assets?

c. If Emma's basis before the distribution was $55,000 rather than $40,000, what is Emma's recognized gain or loss and what is her basis in the distributed assets?