Gary acquired a 30% interest in the Woo General Partnership by contributing investment land with an adjusted basis of $30,000 and a fair market value of $100,000. Gary originally acquired the land on 2/2/1991. The land was subject to a $40,000 mortgage which was assumed by the Woo partnership as part of the deal.
Ewe Crane acquired a 70% interest in the partnership in exchange for a capital contribution of $140,000 in cash.
Both capital contributions occurred on 1 January 2014
The partnership used the land contributed by Gary to operate a parking lot
During 2014, the partnership had net rental income of $70,000
In addition, on 13 April 2014, the land was sold for a total sales price of @125,000 ($85,000 of cash, and the buyer assumed the $40,000 mortgage).
During 2014, the partnership distributed #30,000 of cash ($90,000 of Gary and 421,000 to Ewe.)
The partnership had $60,000 of recourse liabilities as of 12/31/2014 (the partnership borrowed $60,000 to provide funds for operations and possible expansion.)
Required:
How much and what type of income and/or loss must Gary report from 2014 partnership activity?
What is Gary’s basis in the partnership as of 12/31/2014?