10

Tim, Al, and Pat contributed assets to form the equal TAP Partnership. Tim contributed cash of $40,000 and land with a basis of $80,000 (fair market value of $60,000). Al contributed cash of $60,000 and land with a basis of $50,000 (fair market value of $40,000). Pat contributed cash of $60,000 and a fully depreciated property ($0 basis) valued at $40,000. Which of the following tax treatments is not correct?

a.Pat realizes a gain of $40,000 but recognizes $0 gain.

b.TAP has a basis of $80,000, $50,000, and $0 in the land and property (excluding cash) contributed by Tim, Al, and Pat, respectively.

c.Al realizes and recognizes a loss of $10,000.

d.Tim's basis in his partnership interest is $120,000.

e.All of these choices are correct.

This is the full question, no more information should be required.