On January 1 ^st of the current year, Al and Brie form a partnership, called AB Partnership, to invest in property. Al contributes investment land that he acquired two years ago, and that has a fair market value of $100,000. Brie contributes $100,000 of cash. Each partner receives a 50% interest in the partnerships capital, profits, and losses.

Problem 1. Pre-Contribution Gain. For purposes of this problem 1, assume that Als basis in the land at the time he contributed it to the partnership was $50,000.

(b) Under the "traditional method" of accounting for 704(c) gain, how will the partnership allocate its gain or loss for book and tax purposes if the partnership sells the land for, alternatively, either $100,000 or $150,000?

(c) Under the "traditional method" of accounting for 704(c) gain, how will the partnership allocate its gain or loss for book and tax purposes if the partnership sells the land for, alternatively, either $70,000 or $30,000? How would your answer change for the $70,000 sale if the partnership used the remedial allocation method?

(d) Assume the partnership invests Brie's cash in stock that appreciates to $130,000 during the tax year. If the partnership used the "traditional method with curative allocations and the land were sold during the tax year for $70K (similar to (c) above) but the stock were retained, does the stock value change how the sale of the property impacts the partners gain or loss as well as the capital accounts? What if the stock were sold during the year for $130,000?