Alan and Bob form the equal AB partnership. Alan contributes property FMV $200,000, adjusted tax basis $80,000 and Bob contributes cash of $200,000. The property is depreciated straight line over a 10 year period for book and tax purposes. AB partnership also has other property FMV $400,000, adjusted tax basis $400,000 depreciated straight line over 10 years for book and tax.

a) Under IRC Sec. 704(c). how much is the potential built in gain to Alan?

b) How much tax depreciation is allocated to Bob and Alan in year 1 under 704(c)?

c) When the $80,000 of tax depreciation is used, how does Bob receive additional depreciation? Explain the concept of curative allocations.