Alex and Betty have agreed to form a cash-basis general partnership

As of January 1, 20X4,

Alex contributed $175,000 cash and an apartment complex valued at $2,578,000. Alex purchased the complex on April 12, 20X1 for $1,850,000 and has been operating the property as a sole proprietorship. The property is subject to a recourse debt of $775,000 that is assumed by the partnership.

Betty contributed $1,080,000 cash and an apartment complex valued at $2,600,000 and investment land valued at $425,000. Betty purchased the complex on November 7, 20X2 for $2,125,000 and has been operating the property as a sole proprietorship. The complex is subject to a nonrecourse debt of $2,127,000.The land was purchased on August 28, 20X2 for $325,000.

In November and December 20X3, Alex and Betty paid $17,000 for expenses that qualify as organizational costs. During this time, they also paid $13,000 for costs that meet the denition of start-up expenses. The $30,000 expense was paid for evenly by the two partners.

Immediately after formation, Alex and Betty agreed to admit Charles to the partnership. In return for agreeing to manage the daily operations of the partnership, Charles received a 10% interest in capital and prots. His interest in the partnership vests immediately.

1.Calculate Inside Basis of Apartment Buildings contributed (assume no depreciation deducted)

2.Calculate Inside Basis of Apartment Buildings contributed (assume depreciation deducted)

3.Create Journal Entries for the contribution of property for Alex and Betty (using Tax Basis and FMV)

4.Calculate Outside Basis for Alex and Betty