Reference no: EM132869032

Question - A contributes $100,000 cash to the AB general partnership and B contributes a building with an adjusted basis of $50,000 and a fair market value of $100,000. Unless otherwise stated, apply the traditional method with respect to all contributed property governed by 704(c).

(a) If the building is depreciable, has a ten-year recovery period and is depreciated under the straight-line method, how much tax and book depreciation will be allocated to each partner for each year?

(b) Same as (a), above, except that B's basis in the building is $90,000?

(c) If in (a), above, the building is sold for $100,000 after it has been held (and depreciated) by the partnership for two years, how must the partnership allocate the tax again on the sale? What is the book gain and how must it be allocated? Discuss.