Kele and Nova wish to form the Sioux Partnership. Kele contributes property with an adjusted basis of $70,000, a fair market value of $200,000 that is subject to an $80,000 liability in exchange for 40 percent of Sioux. Nova receives a 60 percent interest in Sioux in exchange for providing services worth $10,000 and $170,000 cash.

Transcribed Image Text:

a. What amount of gain or loss must Kele recognize as a result of transferring property to the partnership? b. What is Kele's basis in the partnership interest immediately after the formation of the partnership including allocation of partnership liabilities? c. What is the partnership's basis in the property contributed by Kele? d. What is Nova's basis in the partnership interest immediately after the formation of the partnership including allocation of partnership liabilities? $. e. How much income does Nova recognize on the exchange? $.