1065 partnership closing, assets taken by partners

My client has a small partnership with 2 partners. The partnership dissolved. Each partner took an asset. How does this gets reported? Adjusted basis of 1 asset is $500. Does this get reported as a distribution in the amount of $500 to the partner? Or do I take the asset's FMV and report that amount as a property distribution to the partner?

§732(b)

https://www.law.cornell.edu/uscode/text/26/732

That's a good place to start but it can get a bit more complicated. https://www.thetaxadviser.com/issues/20 ... f-llc.html