Jackson, Beau and Oliver have always dreamed of operating a pizza restaurant. They finally decide to take the big plunge. Jackson and Beau are wealthy, and they each put in cash of $90,000. Oliver does not have the cash, but he has a small building that would be ideal for use for the restaurant. The building has been appraised at $180,000, but it has a recourse mortgage attached to it, of $90,000, which the partnership assumes from Oliver as part of the deal.

a) If the basis of the building is $120,000, state the tax result to the partners.

b) Assume the same, except that the building has a basis of only $30,000.

c) Assume the same as in (a), but that the debt is nonrecourse, and the partners agree that for purposes of allocating nonrecourse liabilities they each have a one-third interest in profits.