The following is similar to the Corporation problem but this is a Partnership.

Mary and Todd form the MT Partnership, with a transfer of the following properties:

Mary $500,000 cash

Todd $500,000 FMV property

$300,000 tax basis

Both Mary and Todd receive a 50% interest in the partnership.

Complete the following

	Mary	Todd
Realized gain	0	0
Recognized gain	0	0
Basis of Stock	500,000	500,000
MT basis in contributed asset	500,000	300,000

VARIATION 1: In addition to Mary and Todd, Karla joins the partnership at its inception. Karla will provide services to the partnership in exchange for a 25% profits interest in the partnership. That is, she receives 25% of the profits but no share of the capital. What happens to Karla? Does anything change for Mary or Todd? Why or why not? CHECK THE BOOK AS A SOURCE

VARIATION 2: return to original facts (no Karla). Todds property is valued at $700,000 but is contributed subject to a $200,000 liability. Under partnership debt sharing rules, both Mary and Todd will have a 50% share of the debt.

Complete the following

	Mary	Todd
Realized gain
Recognized gain
Basis of Stock
MT basis in contributed asset

VARIATION 3: return to original facts (no Karla). Todds property is valued at $1,500,000 but is contributed subject to a $1,000,000 liability. Under partnership debt sharing rules, both Mary and Todd will have a 50% share of the liability.

Complete the following

	Mary	Todd
Realized gain
Recognized gain
Basis of Stock
MT basis in contributed asset