1. Yu and Jian formed the X general partnership on September 4, 20X5. They agreed to split profits and losses 60% to Yu and 40% to Jian. Yu contributed $60,000 cash to the partnership. Jian contributed a capital asset with a FMV of $80,000, a basis of $20,000 and subject to a $40,000 mortgage. The contributions to the partnership were made on September 7, 20X5. Jians holding period for the property began on August 24, 20x1.

Determine the following with regard to the contributions: (1) Yus, Jians, and Xs recognized gain or loss; (2) Yu and Jians outside basis and the date their holding period began for their partnership interest; (3) Xs basis in the property received from Jian and the date its holding period for the property began.

2. Dan and Julia are equal partners in the K partnership. One of Ks customers is delinquent in its payment of a $3,000 account receivable. In satisfaction of the receivable K accepts a building with a FMV of $50,000, subject to a $52,000 mortgage. K agrees to accept the building subject to the mortgage, but does not assume the mortgage. Julias outside basis prior to K taking the building was $70,000.

Determine Julias outside basis after K accepts the building in satisfaction of the account receivable and Ks basis in the building.

3. M and H each contributed $40,000 to the MH Partnership. The partnership purchased office furniture for $80,000, using $20,000 cash and a recourse note payable of $60,000. M and H split partnership losses 60/40. Upon liquidation of MH, partners with deficit capital accounts must contribute cash in an amount equal to the deficit. The books of MH reflect the following:

Basis FMV

Cash $20,000 $20,000

Office furniture $80,000 $80,000

$100,000 $100,000

Recourse note $60,000 $60,000

M, capital $20,000 $20,000

H, capital $20,000 $20,000

$100,000 $100,000

Determine Ms and Hs outside basis immediately after the purchase of the office equipment.