A, B and C decide to form a partnership for the purpose of developing real property. A and B are wealthy individuals, with no particular real estate experience. C is an experienced developer. The parties agree that A and B will each contribute $1,000,000 to the venture, and that C will contribute his expertise. What tax consequences will result from formation of the venture under each of the following alternatives?

1. In exchange for cash contributions of $1,000,000 apiece, A and B each receive 40% interest in the profits, losses and capital of the venture. In exchange for his future services, C receives the remaining 20% interest in profits, losses and capital.
2. In exchange for their cash contributions, A and B each receive a 50% interest in capital and losses. Profits of the venture are divided 40% to A, 40% to B and 20% to C.
3. What if in a., instead of contributing cash, A and B jointly contribute a piece of raw land that they have held for investment for several years? The property is worth $2,000,000, and it has a basis of $100,000.

4. Would your answer to part c differ if A and B form a partnership in year one, and admit C as a partner in year three?