Lydia and Oliver wish to form a partnership to conduct a new business. They each contribute the following assets in exchange for equal interests in LO Partnership. Lydias tax basis in the contributed equipment is $22,000 and Olivers tax basis in the contributed equipment is $57,000.

	Lydia	Oliver
Cash	$50,000	$70,000
Business equipment (FMV)	50,000	30,000

a. Compute each individuals realized and recognized gain or loss on the formation of LO Partnership.

b. Compute each individuals tax basis in their half interest in LO Partnership.

c. Compute the partnerships tax basis in the equipment contributed by each indi-vidual partner.