Jeordie and Kendis created the JK Partnership by each contributing $150,000 cash. Pertinent provisions in the JK Partnership agreement are as follows (pay attention to s' and s'):

Partners' capital accounts will be maintained in accordance with Reg. 1.704-1(b) (the economic effect Regulations)

Any partner with a deficit capital account will be required to restore that capital account when the partner's interest is liquidated.

MACRs depreciation deductions will be specially allocated as follows, 20% to Jeordie and 80% to Kendis. All other items of partnership income, gain, loss, deduction, and credit will be allocated equally between the two partners.

JK Partnership used the $300,000 contributed by Jeordie and Kendis to acquire a depreciable asset. The asset was immediately placed in service and generated a MACRs depreciation deduction of $60,000 for that year. No other operating transactions occurred (yes, this is really weird, completely artificial).

At the end of the year JK Partnership sold the property for $240,000 cash and immediately after liquidated.

REQUIRED:

1: What is JK Partnership's adjusted tax basis in the purchased property on the day it was sold?

2: How much is JK Partnership's gain recognized, if any, on the sale of the property?

3: How much is Jeordie's 704(b) book capital account just before liquidation?

4: How much is Kendis' 704(b) book capital account just before liquidation?

5: What asset does the partnership have to distribute just before liquidation and what is the value of that asset?

6: What does Jeordie and Kendis receive at liquidation?