Final answer:
Megan's basis in the land is $120,000, which fully absorbs her basis in the partnership before the distribution, leaving the basis in the inventory she received as $0. Therefore, the correct option is b.
Step-by-step explanation:
When dealing with partnership tax basis calculations for non liquidating distributions, the general rule is that the partner's basis in the property received is equal to the property's basis in the hands of the partnership, not to exceed the partner's outside basis in the partnership interest immediately before the distribution. In this case, Megan's basis in the MYP Partnership interest was $120,000 before the distribution.
The land has a basis of $100,000 and the inventory has a basis of $80,000. The total basis of the distributed properties is $180,000, which is more than Megan’s outside basis. The basis of the distributed properties must be allocated to the outside basis Megan has in the partnership. The basis of the land transferred to Megan would be her former basis in the partnership ($120,000), fully absorbing it, which makes the basis of the inventory she received $0, since the basis of the partnership interest has been fully allocated to the land. Therefore, the correct option is b. $120,000 (land) and $0 (inventory).