$(4$ points$)$ On January $1,$ Ryan and James decided to open a Peruvian chicken restaurant $($yum$!).$ Ryan contributed the building and land for the restaurant that had a fair market value of $$178,000$ and adjusted tax basis of $$128,000$ for a $50$ percent profits interest and capital interest. Ryan had a $$35,000$ business loan. James contributed $$47,000$ of cash for a $50$ percent profits interest and capital interest. The new partnership relieves Ryan by taking on the loan. Should the partnership fail to pay the loan, the creditor is only able to claim potential future profits of the company but cannot go after the personal assets of either partner. The company uses a calendar year tax period.

In the above scenario, how much income $($or loss$)$ do Ryan and James have to immediately recognize for tax purposes on their initial contributions to the partnership?

I. None of the answers given here.

II$.$ Ryan recognizes $$50,000$ of income. James recognizes $$47,000$ income.

III. Ryan recognizes $$50,000$ of income. James recognizes $$0$ of income.

IV$.$ Ryan recognizes $$0$ of income. James recognizes $$47,000$ of loss.

V$.$ Ryan recognizes $$0$ of income. James recognizes $$0$ of income.

VI$.$ Ryan recognizes $$50,000$ of loss. James recognizes $$47,000$ of loss.