At the beginning of the current year, Barry and Iriving formed the Partnership by transferring cash and property to the partnership in exchange for a partnership interest, with each having a 50% interest. Specifically, Barry transferred property having a $65,000 FMV, a $34,000 adjusted basis, and subject to a $6,000 liability, which the partnership assumed. Iriving contributed $60,000 cash to the partnership. The partnership also borrowed $31,000 from the bank to use in its operations. All liabilities are recourse for which the partners have an equal economic risk of loss. During the current year, the partnership earned $29,000 of net ordinary income and reinvested this amount in new property.

Requirement c. For the partnership, prepare a tax and book balance sheet at the end of the current year. Begin by preparing the tax balance sheet. Then prepare the book balance sheet. Tax Cash Contributed property New Property Total assets Liabilities Capital accounts: Barry MII I III Irving Total liabilities and capital accounts