Question: Advanced Taxation.
1. Byron, Tennyson and Shelley contributed cash assets to form the equal BTS Partnership. Byron contributed cash of $30,000 and land with a basis of $10,000 and FMV of $70,000. Tennyson contributed cash of $70,000 and land with a basis of $50,000 and FMV of $30,000. Shelley contributed cash of $50,000 and a fully depreciated property ($0 basis) valued at $50,000. Answer the following questions:
a. What are the bases for each Byron, Tennyson and Shelley?
b. What is the partnership's inside basis?
c. Will the partnership or any of the partners recognize any gain on this transaction? Calculate the gain or loss realized and recognized for each party. Explain why gain or loss should or should not be recognized.