Victor, Arthur and Diana form JUS, an equal, cash method, general partnership.

Victor contributes equipment held for 15 months with a value of $250,000 and an adjusted basis of $175,000. Victor paid $200,000 for the property and has claimed $25,000 of depreciation. Victor also contributes $150,000 cash.

Arthur contributes nondepreciable property purchased 3 years ago for $475,000 for investment purposes. The land has a value of $400,000. The partnership holds the property as inventory.

Diana contributes nondepreciable property that has a value of $400,000 that she purchased 8 months ago for $350,000. Diana is a dealer in the property purchased (it is inventory to her), but the property is investment property (a capital asset) to the partnership.

Assume the property contributed by Diana is sold three years after formation for $450,000. (1) What is the amount of book and tax gain or loss on the sale and (2) how is the book and tax gain allocated among the partners.