Ann and bob form a general partnership. Ann contributed $$10,000$ and Bob contributed $$50,000.$ They agreed to share profits and losses equally. The partnership agreement provided that, upon liquidation, all partners must restore negative capital account balances and that liquidating distributions would be made based on capital account balances.

The partnership purchased a building for $$100,000.$ It paid $$60,000$ and obtained a $$40,000$ recourse loan for the remaining purchase price.

a$.$ Under the constructive liquidation scenario what is the gain or loss. Show all work.

b$.$ Show the allocation and impact on Ann's and Bob's capital account.

c$.$ What is Ann's and Bob's outside basis after purchase of the building?

d$.$ Prepare a balance sheet to reflect the situation of the partners and the partnership after purchase of the building.