Problem $1$

Darrel, Sissy, and Carol form a partnership. Darrel and Sissy give equipment and a building,

respectively. Carol agrees to perform all of the accounting and office work in exchange for a

$10\%$ interest.

a$.$ Do any of the partners recognize any gain? If so$,$ how much and why?

b$.$ What is the basis for each partner in his or her partnership interest?

c$.$ What is the basis for the partnership of each asset?