Question 4 Note: Please show detailed calculations and explanations. Answers without showing calculations/explanations, will not receive credit. On March 15, 20X9, Troy, Peter, and Sarah formed Picture Perfect General Partnership. This partnership was created to sell a variety of cameras, picture frames, and other photography accessories. When it was formed, the partners received equal profits and capital interests, and the following items were contributed by each partner: - Troy-cash of $3,000, inventory with an FMV and tax basis of $5,000, and a building with an FMV of $22,000 and adjusted basis of $10,000. Additionally, the building was secured by a $10,000 nonrecourse mortgage. - Peter-cash of $5,000, accounts payable of $12,000 (recourse debt for which each partner becomes equally responsible), and land with an FMV of $27,000 and tax basis of $20,000. - Sarah-cash of $2,000, accounts receivable with an FMV and tax basis of $1,000, and equipment with an FMV of $40,000 and adjusted basis of $3,500. Sarah also contributed a $23,000 nonrecourse note payable secured by the equipment. b) To get the outside basis we calculate the adjusted basis of the partnership interest by adding the adjusted basis of the contributed property and any cash contributed and then subtracting any liabilities assumed by the partnership. Cash contribution: 3000 Inventory FMV: 5000 Building FMV: 22000 Building Adjusted basis: 10000 Nonrecourse mortgage: 10000 Adjusted basis of contributed property: 5000+10000=15000 Adjusted basis of partnership interest: 15000+300010000=8000 c) What is Peter's outside basis, and how much gain (loss) must the partner recognize in 20X9, when Picture Perfect was formed? d) What is Sarah's outside basis, and how much gain (loss) must the partner recognize in 20X9, when Picture Perfect was formed