Discuss the tax impact to Unicorn and Zebra

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Question - Unicorn and Zebra form the UZ Co., a partnership. Unicorn contributes inventory with fair market value of $650,000 and an adjusted basis of $200,000 and cash of 350,000 for a 50% interest in the partnership. Zebra contributes computers, hardware, and proprietary software with a fair market value of $1,000,000 and a tax basis of $300,000 for a 50% interest in the partnership. The computer hardware, which was purchased from IBM on credit, is subject to an equipment loan of $300,000.

Please discuss the tax impact to:

1. Unicorn,

2. Zebra, and

3. UZ Co.

Reference no: EM132218205

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