THE XYZ EQUAL PARTNERSHIP WAS ORIGINALLY FUNDED WITH CASH CONTRIBUTIONS FROM A,Y AND Z. IT HOLDS DEBT FINANCED LONG TERM INVESTMENT IN REAL ESTATE. THE PARTNERS EACH HAVE$ 400.00 BASIS IN THEIR PARTNERSHIP INTEREST.

XYZ PARTNERSHIP

ASSETS

TAX BASIS FMV CASH400 400REALESTATEPARCELl600 700REALESTATEPARCEL2200 400TOTAL ASSETS1200 1500

LIABILITIES

RECOURSE LIABILITIES600 600

CAPITAL

X200 300y200 300z200 300TOTAL LIABILITIES AND1200 1500CAPITAL

J ISADMITTED TO THE PARTNERSHIP AS A ONE FOURTH EQUALPARTNER IN EXCHANGE FOR A CONTRIBUTION OF REAL ESTATE, PARCEL 3 WITH A FAIR VALUE OF$ 1500, A BASIS OF$ 300 AND IS ENCUMBERED BY A RECOURSEDEBT OF$ 1200 FOR WHICH THE PARTNERSHIP ASSUMES THE RESPONSIBILITY.

WHAT IS THE TAX EFFECT OF THE ADMISSION OF J TO THE PARTNERSHIP AT THE PARTNERSHIP LEVEL AND THE TAX EFFECT TO NEW PARTNER J?