1.A (a cash method taxpayer) is a 25% partner in the ABCD partnership (an accrual method taxpayer) and has a $30,000 outside basis in her partnership interest. A owns depreciable equipment of $1,000 and a fair market value of $20,000. Before any of the following transactions, the partnership has $60,000 of net income each year. What are the tax consequences in the following alternatives?

(a) A sells the equipment to the partnership for $20,000.

(b) A contributes the equipment to the partnership. A is not allocated any additional income, but her capital account is increased by the value of the contributed property. Later in the year, A receives a distribution of $20,000.

(c) Same as (b), above, except that the distribution to A is only $15,000.

(d) Suppose the partnership does not need As equipment in its business but A nevertheless transfers it to the partnership. Partner B transfers similar depreciable property (adjusted basis-- $4,000; fair market value-- $18,000) and $2,000 cash to the partnership. 2 months later, the ABCD partnership distributes As old property to B and Bs old property together with $2,000 to A.