D, E and F form a partnership by contributing the following property (in each case worth $600 net of liabilities) in exchange for equal 1/3 interests in the partnership's capital, profits and losses. The partnership assumes all liabilities encumbering the contributed assets

. D contributes land with a fair market value of $850, which is encumbered by a recourse mortgage of $400. D has held the land for several years as an investment, and his basis in the land is $325. D also contributes $150 in cash.

E contributes a building, a 1231 asset, with a value of $800 in which E has an adjusted basis of $350. The building was purchased several years ago by E and is subject to a recourse mortgage $200.

F, a cash method taxpayer, contributes zero basis accounts receivable from his business worth $600.

(a) With respect to each partner, (i) Is any gain or loss recognized?

(ii) What is her outside basis?

(b) With respect to Partnership itself:

(1) Does it recognize any gain or loss on formation?

(2) What is its inside basis in the contributed property?