Frank, Greta, and Helen each have a one-third interest in the FGH Partnership. On December 31, 2018, the partnership reported the following balance sheet:

	Partnerships Basis	FMV
Assets
Cash	$120,000	$120,000
Assets 1	262,380	360,000
Assets 2	115,200	90,000
Total	$497,580	$570,000
Partners Capital:
Frank	$165, 860	$190,000
Greta	$165, 860	$190,000
Helen	$165, 860	$190,000
Total	$497,580	$570,000

The partnership placed Asset 1 (seven-year property) in service in 2016 and Asset 2 (five-year property) in service in 2017. The partnership did not elect Sec. 179 expensing and elected out of bonus depreciation in both years. Accordingly, it computed the asset adjusted bases at December 31, 2018 as follows:

		Asset 1		Asset 2
Cost		$600,000		$240,000
Depreciation
2016	$85,740
2017	146,940		$48,000
2018	104,940	(337,620)	76,800	(124,800)
Adjusted basis		$262,380		$115,200

At the end of business on December 31, 2018, Helen sold her partnership interest to Hank for $190,000. At the time of sale, the partnership had a Sec. 754 optional basis election in effect but has not elected to use the remedial method for allocating partnership items. Required: The partners have asked you to determine (1) the amount and character of Helen gain or loss; (2) Hanks optional basis adjustment and its allocation to Asset 1 and Asset 2; and (3) the amount of depreciation allocated to Hank in 2019, including the effects of the optional basis adjustment. At a minimum, you should consult the following resources: IRC Secs. 743 and 751 Reg. Sec. 1.743-1(j)

Reg. Sec. 1.755-1