Luis and Jennifer formed the JL Partnership as equal partners. Each partner contributed cash and property with a value of $80,000 for partnership operations. As a result of these contributions, Luis had a basis of $80,000 and Jennifer a basis of $60,000 in their partnership interests. At the end of their first year of operations, they had the following results: Gross sales $110,000 Cost of goods sold 75,000 Rent expense 18,000 Employees' salaries 20,000 Utilities 3,000 Charitable contribution 500 Section 1231 gain 1,000 Tax-exempt interest income 2,000 What is the net income, excluding separately stated items, that each partner is required to report at the end of the year? How is each of the separately stated items treated on the partners' tax returns? What is each partner's basis at year-end? Explain how Luis and Jennifer's initial bases could differ if they both contributed cash and property valued at $80,000.