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	$	72		$	72
Land		96			144
Inventory		60			36
	$	228		$	252
Mary	$	114		$	126
Scott		114			126
	$	228		$	252

At the end of the current year, Kari will receive a one-third capital interest only in exchange for services rendered. Karis 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.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________ Basis_________

. Prepare a balance sheet of the partnership immediately after Karis admission showing the partners tax capital accounts and capital accounts stated at fair market value.