A, B, and C each contribute $20,000 to form the ABC general partnership. The partnership agreement satisfies the primary test for economic effect under Internal Revenue Code Section 704(b). Partnership profits and losses are allocated 40% to A, 40% to B and 20% to C. The partnership uses its $60,000 cash and borrows an additional $40,000 on a recourse basis and purchases land for $100,000.

(a) How will the $40,000 liability be allocated and what will be each partners outside basis?

(b) What result in (a), above, if A, B and C had contributed $10,000, $20,000 and $30,000, respectively, to the ABC partnership?

(c) What result in (a), above, if A and B are limited partners who are not obligated to restore a capital account deficit but the partnership agreement includes a qualified income offset?

(d) What result in (c), above, if A contributes $15,000 of stock to the partnership as security for the liability and all income, gain or loss on the stock is allocated to A? What result if A contributes his $15,000 note as security for the liability?

(e) What result in (c), above, if A personally guarantees the $40,000 liability?