Hazel Patrick owns a building in which she practices dentistry. She also owns substantial amounts of equipment used in her practice. The building cost her $100,000 and its adjusted basis is $60,000; its present fair market value is $200,000. Had she used straight-line depreciation, her adjusted basis would be

$75,000. Her equipment, which originally cost her $20,000 three years ago, has an adjusted basis of $5,000 and a present fair market value of $7,500. She also has cashbasis accounts receivable with a face amount of $20,000 and accounts payable in the amount of $15,000. She has $5,000 in fair market value of dental gold, which she had expensed upon purchase.

Hazel has been approached to enter into an equal partnership with another dental practitioner. They would prefer that their contributions to the partnership have substantially equal value. It has been suggested that Hazel either retain her building and rent it to the partnership at

$25,000 net rent per year or place a mortgage of $100,000 against it and contribute it to the new partnership subject to the mortgage.

Compute Hazel’s basis in the partnership under the alternative propositions.

Determine what and how much, if any, are the recaptures.