Oscar and Frank Form an Equal Partnership, the O and F

question 4

Essay

Oscar and Frank form an equal partnership, the O and F Partnership. Oscar contributes land with an adjusted basis of $45,000, subject to a mortgage of $100,000, in exchange for a partnership interest worth $250,000. Frank contributes cash of $100,000 and performs services for the partnership in exchange for a partnership interest worth $250,000.
a.What is the amount of Oscar's recognized gain or loss (if any) as a result of the contribution to the partnership in exchange for the partnership interest?
b.What is Oscar's basis in his partnership interest immediately after the contribution?
c.What is the amount of Frank's recognized income or loss (if any) as a result of the receipt of the partnership interest in exchange for the cash and services?
d.What is the partnership's basis in the land received from Oscar?

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Definitions:

Family-focused Lifestyle

A way of life that prioritizes family relationships and activities, emphasizing the importance of spending time together and supporting each other.

Balanced Investment

An investment strategy that aims to balance risk and return by diversifying assets across different classes such as stocks, bonds, and cash.

Retirement

The phase of life where one ends their professional career or employment, usually due to age.

Employing Older Adults

The practice or action of hiring individuals who are beyond the typical age of retirement to work.