3. Donal transfers land with an adjusted basis of $12 and a fair market value of $100 to the partnership in exchange for a $100 capital account and a 10% interest in the profits and losses. The land was acquired three years ago and has been held for investment. At the time of transfer, the partnership has existing liabilities of $200 and Donald share of those liabilities is $20 (10% of $200). No other transfers take place at the time.

a. Does Donal recognize gain or loss on the transfer of the land?

b. What is Donal's basis and holding period in the partnership interest he receives for the land?

c. What is the partnership's basis and holding period In the land?

d. What if any impact is there to Donal if the partnership pays off $20 in total of the liabilities before the end of the year?