Problem 21-28 (LO. 3, 8)

Emma and Laine form the equal EL Partnership. Emma contributes cash of $100,000. Laine contributes property with an adjusted basis of $40,000 and a fair market value of $100,000.

If an amount is zero, enter "0".

a. How much gain, if any, must Emma and Laine recognize on the contributions?

Emma recognizes a gain of $ on the transfer and Laine recognizes a gain of $.

b. Emma's tax basis in her partnership interest is $. Her 704(b) book basis is $.

c. Laine's tax basis in her partnership interest is $. Her 704(b) book basis is $.

d. The partnership will take a $ basis in the assets it receives.

e. How will the partnership account for the difference between the basis and value of the property transferred by Laine?

The partnership will treat the $ difference between the basis and fair market value of the property Laine contributed as a precontribution that allocated to Laine when the property is sold or as described under the Regulations if the property is depreciable.