Ben and Jerry formed a partnership several years ago. They share profits and losses equally and the allocations allowed in accordance with their partnership agreement have, to date, had substantial economic effect. On December 318, 2017, Ben's capital account, for book purposes, was $1,000. Jerry's capital account was $3,000 on the same date. During 2018, the partnership earned $6,000 of ordinary income and $1,000 of tax-exempt bond interest. In addition, during the course of the year, the partnership distributed jewelry to Jerry. The partnership's book basis in the jewelry was $1,000 as of January 1, 2018. However, the fair market value of the jewelry on the date of the distribution was $4,000. The partnership's tax basis in the jewelry was $1,000 at the time of the distribution. ched chove