D, E, and F form a partnership by contributing the following property (in each case worth $200, 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 $400, which is encumbered by a reverse mortgage of $240. D has held the land for several years as an investment and his basis in the land is $100. D also contributes $40 in cash

E contributes a building, a Section 1231 asset, with a value of $260, in which he has an adjusted basis of $130.00. The building was purchased several years ago by E and is subject to a recourse mortgage $60.

F is a cash Method taxpayer contributes 0 basis accounts receivable from his business worth $350.00 and assigns his accounts payable of $150 to the partnership.

1. With respect to each partner, is any gain or loss recognized? Explain.

2. What is each partner's outside basis? How did you compute?

Problem 2: D, E and F form a partnership by contributing the following property (in each case worth $200 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 $400, which is encumbered by a recourse mortgage of $240. D has held the land for several years as an investment, and his basis in the land is $100. D also contributes $40 in cash. - E contributes a building, a 1231 asset, with a value of $260 in which E has an adjusted basis of $130. The building was purchased several years ago by E and is subject to a recourse mortgage $60. - F, a cash method taxpayer, contributes zero basis accounts receivable from his business worth $350, and assigns his accounts payable of $150 to the partnership. 1. With respect to each partner, is any gain or loss recognized? Explain. 2. What is each partner's outside basis? How did you compute