1a. Elaines original basis in the Hornbeam Partnership was $30,000. Her share of the taxable income from the partnership since she purchased the interest has been $90,000, and Elaine has received $80,000 in cash distributions from the partnership. Elaine did not recognize any gains as a result of the distributions. Calculate Elaines current basis in her partnership interest.

1b. Larry and Jessica form the L&J Partnership. Larry contributes property with an adjusted basis of $70,000, a fair market value of $200,000, and subject to a liability of $80,000 in exchange for a 40 percent interest in the partnership. Jessica receives a 60 percent interest in the partnership in exchange for services performed for the partnership, valued at $10,000, and cash of $170,000.

a. What amount of gain or lost must Larry recognize as a result of his transfer of the property to the partnership?

b. What is Larrys basis in his partnership interest immediately after the formation of the partnership?

c. What is the partnerships basis in the property contributed by Larry?

d. What is Jessicas basis in her partnership interest immediately after the formation of the partnership?