Mike and Lisa formed a partnership at the beginning of the year. They were equal partners and they had the same basis. When the partnership was formed, Mike contributed the following items:
Basis FMV
Building $150,000 $200,000
Land $ 60,000 $ 70,000
Equipment $50,000 $ 40,000
Total $260,000 $310,000
In order to raise funds for operation of the business the partnership sold both the land and building in the 5th month of operation.
The land was sold for $70,000 and the building was sold for $230,000.
What are the tax consequences of the sale of the land and building on each of the partners?