Gina and Larry form a limited partnership. The partners will both have a 50% interest in profits, losses, and capital. Gina will be the general partner, and Larry will be the limited partner. The limited partners have no obligation to contribute any amount to the partnership in excess of their initial contribution.

Name		Property		FMV		AB		Debt
Gina		land		10,200		3,400		8,500 (non-recourse)
Larry		equip X		8,500		1,700		6,800 (recourse)

Construct the initial Balance Sheets of the Partnership and determine the tax consequences to all the partners. Assume the partnership relieves the partners of responsibility for any debt, and that the partnership uses the remedial allocation method. Also assume the partnership does NOT make the Sec. 754 election.