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

FMV Basis Partnership %

Dennis's equipment $52,500 $10,500 45%

Suzy's building $52,500 $42,000 45%

Katherine's services $0 $010%

1. What amount of gain, if any, do each of the partners recognize?
2. What is the basis for each partner in his or her partnership interest?
3. What is the basis to the partnership of each asset?