Question: A and B form general partnership AB that is not an LLP. A contributes real property with a fair market value of $100,000 subject to

A and B form general partnership AB that is not an LLP. A contributes real property with a fair market value of $100,000 subject to a non-recourse mortgage of $60,000, in exchange for an 80% interest in the partnership. The basis of the contributed property is $20,000. B contributes $10,000 in exchange for a 20% partnership interest. Assume there is a state law assumption of the mortgage by the partnership.

a. What are A's and B's bases for their partnership interests immediately following the formation of the partnership?

b. Does A recognize and gain upon the contribution of the property?

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