Comprehensive Problem 20-80 (LO 20-1, LO 20-2, LO 20-3, LO 20-4, LO 20-5, LO 20-6) (Algo) Skip to question [The following information applies to the questions displayed below.] Aaron, Deanne, and Keon formed the Blue Bell General Partnership at the beginning of the current year. Aaron and Deanne each contributed $160,000, and Keon transferred an acre of undeveloped land to the partnership. The land had a tax basis of $77,500 and was appraised at $230,000. The land was also encumbered with a $77,500 nonrecourse mortgage for which no one was personally liable. All three partners agreed to split profits and losses equally. At the end of the first year, Blue Bell made a $12,000 principal payment on the mortgage. For the first year of operations, the partnership records disclosed the following information:

Sales revenue $ 545,000

Cost of goods sold 450,000

Operating expenses 110,000

Long-term capital gains 3,150

1231 gains (gains for the taxable year are treated as long-term capital gains) 600

Charitable contributions 300

Municipal bond interest 300

Salary paid as a guaranteed payment to Deanne (not included in expenses) 3,000

Comprehensive Problem 20-80 Part 1 (Algo)

Required:

a. Compute the adjusted basis of each partner's interest in the partnership immediately after the formation of the partnership.

b. List the separate items of partnership income, gains, losses, and deductions that the partners must show on their individual income tax returns that include the results of the partnership's first year of operations.

d. What are the partners' adjusted basis in their partnership interests at the end of the first year of operations?