Nina and Sue form an equal partnership during the current year. They agree to share profits and losses equally. Nina contributes cash of $100,000 and Sue contributes property (A/B of $80,000, FMV of $100,000) subject to a recourse debt of $50,000 which the partnership will assume.

a. Is any gain or loss recognized on the formation of the partnership?

b. What basis do the partners have in their partnership interest after the formation?