Frank, Greta, and Helen each have a one-third interest in the FGH Partnership. On December 31, 2012, the partnership reported the following balance sheet:

The partnership placed Asset 1 (seven-year property) in service in 2010 and Asset 2 (five-year property) in service in 2011. The partnership did not elect Sec. 179 expensing and elected out of bonus depreciation in both years. Accordingly, it computed the assets' adjusted bases at December 31, 2012 as follows:

On January 2, 2013, Helen sold her partnership interest to Hank for $190,000. At the time of sale, the partnership had a Sec. 754 optional basis election in effect but has not elected to use the remedial method for allocating partnership items.
Required: The partners have asked you to determine (1) the amount and character of Helen's gain or loss; (2) Hank's optional basis adjustment and its allocation to Asset 1 and Asset 2; and (3) the amount of depreciation allocated to Hank in 2013, including the effects of the optional basis adjustment. At a minimum, you should consult the following resources:
• IRC Secs. 743 and 751
• Reg. Sec. 1.743-1(j)
• Reg. Sec. 1.755-1

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Partnership's Basis FMV $120,000 262,380 115,200 $497,580 S120,000 360,000 90,000 Asset 1 2 Total Partners' Capital: $165,860 165,860 165,860 $497,580 $190,000 190,000 190,000 $570,000 Greta Helen Total Asset 1 Asset 2 $600,000 $240,000 Cost Depreciation 2010 2011 2012 $85,740 146,940 104,940 (337,620)76,800 124,800) 104940 (837620)$75.900(124.800) Adjusted basis $262,380 S115,200