Hector and Walt are purchasing the Copper Partnership from Jan
Hector and Walt are purchasing the Copper Partnership from Jan and Gail for $700,000; Hector and Walt will be equal partners. During the negotiations, Jan and Gail succeeded in having the transaction structured as the purchase of the partnership rather than as a purchase of the individual assets. The adjusted basis of the individual assets of Copper is $580,000.
a. What are Hector's and Walt's bases for their partnership interests (i.e., outside bases)?
b. What is Copper's adjusted basis for its assets after the transaction? Would an optional adjustment-to-basis election be helpful? Why or why not?
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