Mary and Scott formed a partnership that maintains its records on a calendar-year basis. The balance sheet of the MS Partnership at year-end is as follows: Cash Basis $24 Fair Market Value $ 24 Land 24 120 Inventory 421 24 $90 $ 168 Mary Scott $45 $ 84 45 $90 84 $168 At the end of the current year, Kari will receive a one-third capital interest only in exchange for services rendered. Kari's interest will not be subject to a substantial risk of forfeiture, and the costs for the type of services she provided are typically not capitalized by the partnership. For the current year, the income and expenses from operations are equal. Consequently, the only tax consequences for the year are those relating to the admission of Karl to the partnership. (Leave no answer blank. Enter zero if applicable. Do not round intermediate calculations.) a.Compute and characterize any gain or loss Kari may have to recognize as a result of her admission to the partnership. Gain or loss recognized as Mary and Scott formed a partnership that maintains its records on a calendar-year basis. The balance sheet of the MS Partnership at year-end is as follows: Basis Fair Market Value Cash $24 $ 24 Land 24 1201 Inventory 42 24 $90 $ 168 Mary Scott $45 45 $90 $ 84 84 $168 At the end of the current year, Kari will receive a one-third capital interest only in exchange for services rendered. Kari's interest will not be subject to a substantial risk of forfeiture, and the costs for the type of services she provided are typically not capitalized by the partnership. For the current year, the income and expenses from operations are equal. Consequently, the only tax consequences for the year are those relating to the admission of Kari to the partnership. (Leave no answer blank. Enter zero if applicable. Do not round intermediate calculations.) b. Compute Kari's basis in her partnership interest. Basis Mary and Scott formed a partnership that maintains its records on a calendar-year basis. The balance sheet of the MS Partnership at year-end is as follows: Fair Market Basis Value Cash $24 $ 24 Land 24 120 Inventory 42 24 $90 $168 Mary Scott $45 $ 84 45 $90 84 $168 At the end of the current year, Kari will receive a one-third capital interest only in exchange for services rendered. Kari's interest will not be subject to a substantial risk of forfeiture, and the costs for the type of services she provided are typically not capitalized by the partnership. For the current year, the income and expenses from operations are equal. Consequently, the only tax consequences for the year are those relating to the admission of Kari to the partnership. (Leave no answer blank. Enter zero if applicable. Do not round intermediate calculations.) c. Prepare a balance sheet of the partnership immediately after Kari's admission showing the partners' tax capital accounts and capital accounts stated at fair market value. Assets Cash MS Partnership Balance Sheet Tax Basis 704(b)/FMV Land Inventory Totals Capital Capital-Mary Capital-Scott Capital-Kari c. Prepare a balance sheet of the partnership immediately after accounts stated at fair market value. MS Partnership Balance Sheet Tax Basis Assets: Cash Land Inventory Totals Capital: Capital-Mary Capital-Scott Capital-Kari Totals 704(b)/FMV Mary and Scott formed a partnership that maintains its records on a calendar-year basis. The balance sheet of the MS Partnership at year-end is as follows: Fair Basis Cash $24 Market Value $ 24 Land 24 120 Inventory 42 24 $90 $168 Mary Scott $45 $ 84 45 $90 84 $ 168 At the end of the current year, Kari will receive a one-third capital interest only in exchange for services rendered. Kari's interest will not be subject to a substantial risk of forfeiture, and the costs for the type of services she provided are typically not capitalized by the partnership. For the current year, the income and expenses from operations are equal. Consequently, the only tax consequences for the year are those relating to the admission of Kari to the partnership. (Leave no answer blank. Enter zero if applicable. Do not round intermediate calculations.) d. Calculate how much gain or loss Kari would have to recognize if, instead of a capital interest, she received a profits interest. Gain or loss recognized as