Helmut Contributed Land with a Basis of $5,000 and an FMV

Helmut contributed land with a basis of $5,000 and an FMV of $10,000 to the HG Partnership five years ago to acquire a 50% partnership interest. This year the land is distributed to another partner, Gail, when its FMV is $11,000. No other distributions have been made since Helmut became a partner. When the land is distributed to Gail, Helmut recognizes a gain of

A) $0.
B) $2,500.
C) $3,000.
D) $5,000.

Correct Answer:

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