How is the tax gain allocated between the partners

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Question - Gary and Joseph are forming the GJ Partnership. Gary contributes $500,000 cash, and Joseph contributes non-depreciable property (adjusted basis of $200,000 and a fair market value of $550,000). The property is subject to a $50,000 liability, which is also transferred into the partnership and is shared equally by the partners for basis purposes. Gary and Joseph share in all partnership profits equally, except for any pre-contribution gain, which must be allocated according to the statutory rules for built-in gain allocations.

(I) What is Joseph's adjusted tax basis for his partnership interest immediately after the partnership is formed?

(II) What is the partnership's adjusted basis for the property contributed by Justin?

(III) If the partnership sells the property contributed by Joseph for $600,000, how is the tax gain allocated between the partners?

Reference no: EM131643077

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