1-

When Austin Development LLC was formed, Michelle contributed land (value of $1,800,000 and basis of $600,000), and Chadwick contributed cash of $1,000,000 and mineral rights (value of $800,000 and basis of $720,000). Both partners received a 50% interest in partnership profits and capital.

a. How is the land recorded for 704(b) book capital account purposes?

For 704(b) book capital account purposes, Austin records the land at $.

b. What is Austin Development's tax basis in the land? $

c. If Austin Development sells the land five years later for $2,500,000, Michelle reports a $ gain and Chadwick's gain is $.

2-

When Abe's outside basis in the Vacuna Partnership is $211,000, the partnership distributes to him $36,000 cash, three accounts receivable (fair market value of $61,000, inside basis to the partnership of $0), and a parcel of land (fair market value of $484,000, inside basis to the partnership of $420,000). Abe remains a partner in the partnership, and the distribution is proportionate to the partners.

If an amount is zero, enter "0".

a. Does the partnership recognize a gain or loss as a result of this distribution?

b. As a result of the distribution, Abe recognizes .

c. In what order are the assets distributed to Abe?

Calculate Abe's basis in the land, in the inventory, and in his partnership interest immediately following the distribution. Accounts receivable: $ Land: $ Partnership interest: $