Darrel, Sissy, and Carol form a partnership. Darrel and Sissy give equipment and a building, respectively. Carol agrees to perform all of the accounting and office work in exchange for a 10% interest.

Darrel's equipment: FMV: $200,000

Basis: $100,000

Partnership: 60%

Sissy's building: FMV: $100,000

Basis: $50,000

Partnership: 30%

Carol's services: FMV: $ 0

Basis: $ 0

Partnership: 10%

Does any of the partners recognize any gain? If so, how much? Explain.

What is the basis for each partner in his or her partnership interest?

What is the basis to the partnership of each asset?