Problem: Module $7$ Textbook Problem $4$

Learning Objective: $7-6$ Adjust the tax basis in a partnership interest

Jalape$$o Corporation and Habanero Corporation formed a partnership to construct a restaurant. Jalape$$o contributed $$510,000$ cash,

and Habanero contributed land $($$$510,000$ FMV and $$440,000$ basis$)$ in exchange for a $50$ percent interest in Pepper Partnership.

Immediately after its formation, Pepper Partnership borrowed $$255,000$ from a local bank. The debt is recourse $($unsecured by any

specific partnership asset$).$

Required:

a$.$ Compute each partner's initial basis in its partnership interest, assuming that both Jalape$$o and Habanero are general partners.

b$.$ Compute each partner's initial basis in its partnership interest, assuming that Jalape$$o is a general partner, and Habanero is a limited

partner.

Complete this question by entering your answers in the tabs below.

Compute each partner's initial basis in its partnership interest, assuming that both Jalape$$o and Habanero are general

partners.