Problem
Nancy, Kelly, and Riley are equal partners in a newly formed partnership, Barragan, LP. Nancy, an accountant, contributed services for which she would have normally charged $50,000 in exchange for her one-third interest. In addition, Kelly contributed equipment with a FMV of $50,000 and adjusted basis of $45,000. Riley contributed land with a FMV of $50,000 and tax basis of $35,000.
• Blank I: What is Kelly's recognized gain?
• Blank II: What is Kelly's basis in her partnership interest?
• Blank III: What is Nancy's basis in her partnership interest?
• Blank IV: Partnership's basis in the equipment?