At the beginning of the current year, Fabian and Euler formed the FE Partnership by transferring cash and property to the partnership in exchange for a partnership interest, with each having a 50% interest. Specifically, Fabian transferred property having a $40,000 FMV, a $22,000 adjusted basis, and subject to a $9,000 liability, which the partnership assumed. Euler contributed $55,000 cash to the partnership. The partnership also borrowed $27,000 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 $28,000 of net ordinary income and reinvested this amount in new property.

Requirement a. What is the partnership's and each partner's gain or loss recognized on the formation of the partnership? Amount of Gain or Loss Fabian Euler Partnership