1. LP is a limited partner in a newly formed partnership which is engaged in the following activities:

(i) A research and development activity to which LP contributed $10,000 cash; LPs share of partnership nonrecourse liability attributable to this activity is $10,000. LPs share of loss from the research and development activity is $12,000 for the current year.

(ii) A motion picture production activity to which LP contributed $20,000 cash; LPs share of income from this activity for the current year is $25,000. LPs outside basis at the beginning of the year was $40,000, and his share of net gain for the year was $13,000. What are the tax consequences to LP under 465.