Question - On October 1, 20X6, Michael contributes a patent and Jane contributes $200,000 cash to start Awesome Inventions, LLC. Michael and Jane each receive a 50% partnership interest. The patent has a fair market value of $200,000, and Michael's adjusted basis in the patent is $4,000.
What amount of gain must Michael recognize on the formation of the partnership?
What amount of gain must Jane recognize on the formation of the partnership?
What is Michael's beginning outside basis in his partnership interest?
What is Jane's beginning outside basis in her partnership interest?