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Item 5

Moe, Johnny, and Raymond form a partnership and contribute the following assets:

	FMV	Basis	Partnership %
Moes inventory	$ 42,000	$ 10,500	33.3%
Johnnys building	$ 72,000	$ 60,000	33.3%
Raymonds cash	$ 35,000	$ 35,000	33.3%

Johnnys building has a mortgage of $45,000, which the partnership assumes.

Required:

What amount of gain, if any, do each of the partners recognize?

What is the basis for each partner in his partnership interest?

What is the basis to the partnership in each asset?

Would Johnny report any gain if the basis in the building were $36,750?

Note: For all requirements, do not round your intermediate computations. Leave no cells blank. Enter "0" wherever required.