A and B form general partnership AB. A contributes real property with a fair market value of $100,000 subject to a recourse mortgage of $600,00, in exchange for an 80% interest in the partnership. The basis of the contributed property is $20,000. B contributes $10,000 in exchange for a 20% partnership interest. Assume there is a state law assumption of the mortgage by the partnership.

Question: except B indemnifies A with respect to 20% of the mortgage.

a. What are As and Bs bases for their partnership interests immediately following the formation of the partnership?

b. Does A recognize any gain upon the contribution of the property?