Four GRRLs Partnership is owned by four girlfriends. Lacy holds a 40% interest; each of the others owns 20%. Lacy sells investment property to the partnership for its fair market value of $200,000 (Lacy's basis is $250,000). Assume that the investment property immediately after the transfer is not a capital asset of the Four GRRLs Partnership.

a. How much loss, if any, may Lacy recognize? Lacy realizes a loss of $_______ of which $________ is recognized. Certain transactions between a partner and the partnership are treated as if the partner were an outsider, dealing with the partnership at arm's length. Loan transactions, rental payments, and sales of property between the partner and the partnership are generally treated in this manner.

b. If the partnership later sells the property for $260,000, the recognized gain is $___________.

c. If Lacy owned a 60% interest (instead of 40%) in the partnership, Lacy realizes a loss of $_______ of which $_________ is recognized. On the partnership's later sale of the property, it would recognize a gain of $_________.

d. If Lacy owned a 60% interest and her basis in the investment property was $120,000 (instead of $250,000), how much, if any, gain would she recognize on the sale? How would the gain be characterized? Lacy's recognized gain on sale would be $___________, and it would be ordinary income .