Federal Taxation: Suzanne and Bob form the SB General Partnership as equal partners. They make the following contributions: Suzanne, cash basis to partner $45,000 adn FMV $45,000, Inventory basis to partner $14,000 and FMV $15,000; Bob land basis to partner $45,000 and $40,000 FMV, building basis to partner $50,000 and $100,000 FMV. The SB partnership assusmes the $80,000 recourse mortage on the building that Bob contributes, and the partners share the economic risk of loss on the mortage equally. Bob has claimed $40,000 in straight-line depreciation under the MACRS rules on the building. Suzanne is a stockbroker and contributed securities from her inventory. The partnership will hold them as an investment.

a. What amount and character of gain or loss must each partner recognize on the formation of the partnership?

b. What is each partner's basis in his or her partnership interest?

c. What is the partnership' sbasis in each asset?

d.What is the partnerhsip's intital book value of each asset?

e. The partnership holds the securities for two years and then sells them for $20,000. What amount and character of gain must the partnership and each partner report?