On 1/1/22, Imani and Ahmad formed AI Partnership, a limited partnership. Imani will be the general partner and Ahmad will be a limited partner. He will not participate in management of the partnership but will simply hold the interest as a passive investment. Ahmad has no other sources of passive investment. Imani and Ahmad will each have a 50% profit/loss and capital interest. The partnership will make custom masks and sell them on Amazon. Imani's initial contribution to the partnership was a commercial grade sewing machine worth $50,000 (adjusted basis $35,000). Imani had a $20,000 non-recourse loan which the partnership assumed. Ahmad, an attorney, contributed $10,000 of legal services and $40,000 of cash. During 2022, AI Partnership, borrowed $10,000 on an operating line of credit which Ahmed personally guaranteed and $5,000 on another recourse loan related the purchase of additional equipment (with no personal guarantee). During the first year of operation, AI Partnership distributed $10,000 to each partner. The 2022 profit and loss statement (tax basis) is below.

Required:

1. Does either partner recognize income on the initial formation of the partnership?
2. What is AI Partnerships ordinary income and separately stated items?
3. What is Ahmad and Imanis initial partnership basis?
4. What is Ahmad and Imanis partnership basis at the end of 2022?
5. What total amount of taxable income does Ahmad and Imani have for 2022?