Barnett, Frazier, and Reed are to be general partners in the BFR partnership. Frazier transferred $300,000 of cash to BFR and Reed transferred $300,000 of cash to the partnership. Also, in exchange for a one-third (1/3) interest in partnership profits, losses, and capital, Barnett transferred land with an adjusted basis of $560,000 and an FMV of $700,000 to the partnership. At the time of its transfer, the land was encumbered by a $300,000 recourse liability that had been placed on the land three (3) years earlier. Barnett also received $100,000 of cash from the partnership at the time of the transfer of the land. Barnett's net liability relief as a result of the transfer of the land without the application of the disguised rules was equal to $200,000.

a) What is the amount of gain if any, that Barnett must recognize as a consequence of the above transactions

b) What is the partnership's inside basis in the land?

c) What is Barnett's outside basis in his partnership interest?

Answer rating: 100% (QA)

Barnett must recognize 200000 of gain as a consequence of the above transactions The calc... View the full answer