Henry, Hunter, and Harry formed a partnership $($Widget Unlimited$)$ on January $1,2020.$ Henry and Hunter each contributed $$200,000$ and Harry transferred a building he had purchased two years earlier to the partnership. The building had a tax basis of $$150,000$ and was appraised at $$300,000.$ The building was also encumbered with a $$100,000$ mortgage. The partners plan to use the building to manufacture, distribute, and sell green and purple widgets.Harry will work full$-$time operating the business for which he will receive guaranteed payments $($not included in expenses$)$ of $$5,000$ per month. Henry and Hunter will devote less than twelve days a year to the business. At the end of $2020,$ Widgets Unlimited had made $$6,000$ in mortgage principal payments. The partnership agreement specifies that Henry, Hunter, and Harry will share in income$/$loss in the ratio of $3$:$3$:$4.$For the first year of operation, the partnership records disclose the following information:First$-$year disclosuresSales revenue$$820,000$Cost of goods sold$$735,000$Operating expenses$$65,000$Long$-$term capital gains$$3,300$~$1231$ gains$$1,500$Charitable contributions$$700$Political campaign donation$$500$Municipal bond interest$$450$Using the infomation provided what would Henry, Hunter, and Harry's adjusted tax basis immediately after partnership formation and at the end of the first year of operation. Explain in what situations Henry, Hunter, and Harry would need to know the tax basis in their partnerships. Explain how often a partner's tax basis in his partnership needs to be adjusted. Justify your answer with relevant tax code citations.