X contributed rental real estate $($land and building$)$ that was held for investment to a partnership in exchange for a $50\%$ interest. The real estate has a tax basis of $$1\mathrm{.}2$ million and a fair market value of $$2$ million. X$$s real estate is encumbered by a $$1\mathrm{.}5$million non$-$recourse mortgage $($secured by the land and building$)$ and the partnership takes X$$s contributed property subject to the mortgage. The other partner contributed cash of $$500,000$ in exchange for a $50\%$ interest. The cash contribution by the other partner will be used to make renovations $($i$.$e$.,$ capital improvements$)$ to the real estate contributed by X$.$ Assume that the partnership agreement complies with the requirements of the $704($b$)$ regulations with respect to allocations, distributions, etc. Assume also that the partnership agreement provides that for purposes of $752,$ the partners$$ share of $$excess$$ non$-$recourse liabilities are based on the partners$$ interest in the partnership.

$1.$ What are the tax implications to X and the partnership upon the execution of this transaction assuming the $$1\mathrm{.}5$ million of debt on the property was incurred three years prior to the contribution to the partnership? Compute the tax basis of the partner$$s interest and partnership assets pursuant to $722$ and $723,$ respectively.

$2.$ What if the liability was incurred one year before the contribution to the partnership? Compute Partner X$$s basis in partnership interest pursuant to $722$ and partnership$$s basis in real estate pursuant to $723.$