At the beginning of the current year, Bonnie and Clyde formed the BC partnership, with each having a 50% interest. Bonnie transferred property with a $50,000 FMV, a $30,000 adjusted basis and subject to a $10,000 liability assumed by BC. Clyde contributed $40,000 cash. BC also borrowed $28,000 from a bank. All liabilities are recourse for which the partners have an equal economic risk of loss. During the current year, BC earned $24,000 of ordinary income and reinvested this amount in new property.
A. What is the partnership's and each partner's gain or loss recognized on the formation of the partnership?
B. What is each partner's basis in his or her partnership interest at the end of the current year?