Question
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
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?
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