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Determine each partner outside basis in the partnership

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Reference no: EM133118664

Question - Luke, Leah, Jabba, and Bobba form a partnership. Luke acquires a 1/4th general partnership interest in exchange for a contribution of Land with a basis of $45,000 and a fair market value of $205,000, subject to a recourse liability of $80,000. Leah, Jabba, and Bobba each contribute $125,000 cash in exchange for their 1/4th general partnership interest.

Required -

1. Assume that each partner will be allocated 1/4th of the liability under section 752 following the contribution and the partnership's assumption of the debt. Determine each partner's outside basis in the partnership.

2. Prepare the partnership's books following formation.

Reference no: EM133118664

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