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Fred and Manuel each contribute $ 1 0 0 , 0 0 0 to the newly formed FM P / S in exchange for a
Fred and Manuel each contribute $ to the newly formed FM PS in exchange for a
interest. The partnership uses the available funds to acquire equipment costing $ and to
fund current operating expenses. The partnership agreement provides that the depreciation will
be allocated to Fred and to Manuel. All other items of income and loss will be allocated
equally between the partners. In accordance with the partnership agreement, upon liquidation of
the partnership, property will be distributed to the partners in accordance with their capital
account balances. Also in accordance with the partnership agreement, any partners with a
negative capital account must contribute cash in the amount of the negative balance to restore the
capital account to zero.
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