Chris, Dana, Mike and BeBe decide to form a partnership to operate a pizza restaurant. They need $200,000 as a down payment on a loan. They therefore agree to each put in $50,000. The restaurant will be called Fatboy Pizza. After it is formed, the partnership purchases a building and equipment. It puts down the $200,000 as a down payment, and borrows $1,800,000 recourse.

a) What basis does each partner take in his or her share?

b) What if they were instead a limited partnership and BeBe was the general partner, and the other three were just limited partner investors. What is everyone's basis then?

c) How would you answer (b) if the partnership were not personally liable for the debt (i.e., if it were nonrecourse debt)?