a. On December 31, Gina receives a distribution of $140,000 cash in liquidation of her partnership interest. Nothing is stated in the partnership agreement about goodwill. Gina's outside basis for the partnership interest immediately before the distribution is $90,000. (1) How much is Gina's recognized gain from the distribution

some information is missing in this question:

the fair market value of Gina's interest int he partnership = $480,000 x 25% = $120,000

Gina is receiving $140,000 in cash, therefore, $20,000 can be considered goodwill.

Since Gina's outside basis is $90,000 (= $75,000 of cash + $15,000 of capital assets), she cannot claim any capital gain, instead she must declare an ordinary gain from the distribution (ordinary income) = $140,000 - $90,000 = $50,000.

The partnership can deduct Gina's gain ($50,000) since no part of it included property payment.

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