A and B each contribute $$100,000$ upon formation of a limited partnership. A is a general partner and B is a limited partner. The partnership purchases an office building on leased land for $$200,000$ and elects straight$-$line cost recovery. Assume $($for simplicity$)$ that the property has a $10-$year recovery period. The partnership agreement allocates all items of income and loss equally with the exception of the cost recovery deductions, which are allocated entirely to B$.$ Assume $($perhaps unrealistically$)$ that both partners are unconditionally obligated to restore a deficit to their capital accounts upon a liquidation of the partnership.

$($a$)$Assume that apart from cost recovery deductions, the partnership$$s rental income is equal to its operating expenses. What must the partners$$ respective capital account balances be at the end of year one if the allocation of cost recovery deductions is to have economic effect?

$($b$)$Assume the partnership sells the building on January $1$ of year two and immediately liquidates. Again, with an eye toward qualifying the allocation, how must the proceeds be distributed if the building is sold for $$180,000?$ For $$200,000?$

$($c$)$Assume the agreement further provides that gain on disposition will be allocated to B to the extent of the cost recovery deductions specially allocated to her. What result when the partnership sells the building on January $1$ of year two for $$200,000?$

$($d$)$Assume that B is not required to restore a deficit in her capital account, but the partnership agreement includes a $$qualified income offset.$$ If the partnership continues to operate the building, what is the result to A and B in year one? In year six?

$($e$)$What results in both years under the facts of $($d$),$ above, if in addition B has contributed her promissory note for $$100,000$ to the partnership?

$($f$)$What results under the facts in $($e$),$ above, if in year six the building has a $$400,000$ fair market value, and A and B$,$ acting as partners, agree that they will borrow $$200,000$ on a recourse basis, using the building as security, and distribute the proceeds equally to themselves early in year seven?