LO.6 Tom and Walt are purchasing the Copper Partnership from Jan and Gail for DE C I S ION MAKING

$425,000; Tom and Walt will be equal partners. During the negotiations, Jan and Gail succeeded in having the transaction structured as the purchase of the partnership rather than as a purchase of the individual assets. The adjusted basis of the individual assets of the Copper Partnership is $360,000.

a. What are Tom’s and Walt’s bases for their partnership interests (i.e., outside bases)?

b. What is Copper’s adjusted basis for its assets after the transaction? Would an optional adjustment-to-basis election be helpful?