On January 1, 2020 the Pallas Partnership was formed by Anthony and Marie. Anthony’s contribution to the partnership consisted of $20,000 in cash and equipment with a basis of $80,000 and a fair market value of $100,000. Marie contributed land worth $30,000 and a building worth $300,000. The land and building are subject to a $150,000 recourse mortgage loan, which the partnership assumed. Marie’s bases in the land and building on the date she contributed them to the partnership were $10,000 and $40,000, respectively. The partners have agreed that the capital, income, and losses of the partnership will be allocated 40 percent to Anthony and 60 percent to Marie.

1. How much gain or loss will Anthony recognize on his contribution of cash and equipment to the partnership?
2. What is Anthony’s basis in his partnership interest on January 1, 2020?
3. What is the partnership’s basis in the equipment contributed by Anthony on January 1, 2020?
4. How much gain or loss will Marie recognize on her contribution of land and building to the partnership?
5. What is Marie’s basis in her partnership interest on January 1, 2020?
6. What is the partnership’s basis in the land and building contributed by Marie on January 1, 2020?

Answer rating: 100% (QA)

1 There is no gain or loss will Anthony recognize on his contribution of cash and ... View the full answer