Frank, Greta, and Helen each have a one-third interest in the FGH Partnership. On December 31, 2016, the partnership reported the following balance sheet:

The partnership placed Asset 1 (seven-year property) in service in 2014 and Asset 2 (five-year property) in service in 2015. The partnership did not elect Sec. 179 expensing and elected out of bonus depreciation in both years. Accordingly, it computed the assets€™ adjusted bases at December 31, 2016 as follows:

At the end of business on December 31, 2016, Helen sold her partnership interest to Hank for $190,000. At the time of sale, the partnership had a Sec. 754 optional basis election in effect but has not elected to use the remedial method for allocating partnership items.

Required: The partners have asked you to determine (1) the amount and character of Helen€™s gain or loss; (2) Hank€™s optional basis adjustment and its allocation to Asset 1 and Asset 2; and (3) the amount of depreciation allocated to Hank in 2017, including the effects of the optional basis adjustment. At a minimum, you should consult the following resources:

€¢ IRC Secs. 743 and 751

€¢ Reg. Sec. 1.743-1(j)

€¢ Reg. Sec. 1.755-1

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Partnership's Basis FMV Assets: Cash Asset 1 Asset 2 $120,000 262,380 115,200 $497,580 $120,000 360,000 90,000 $570,000 Total Partners' Capital: Frank Greta $165,860 165,860 165,860 $497,580 $190,000 190,000 190,000 $570,000 Helen Total Asset 1 Asset 2 $600,000 $240,000 Cost Depreciation: 2014 2015 2016 $85,740 146,940 104,940 $48,000 (337,620) (124,800) 76,800 Adjusted basis $262,380 $115,200