Q contributed property to Quake Partners in exchange for a 1/3^rd partnership interest. The tax basis and fair market value of the property were $500,000 at the date of the contribution. It was subject to a contingent liability, however, in the amount of $300,000.

What will be Qs initial tax basis in her partnership interest (assuming the partnership has no other liabilities)?

Assume that Q subsequently sold her partnership interest to an unrelated buyer for $250,000 cash. How much gain or loss will she recognize in connection with the sale?