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:

Pascal's Triangle

Pascal's Triangle is a triangular array of binomial coefficients, with each row constructing the coefficients of the expansions of a binomial raised to consecutive powers.

Expression

A combination of symbols that jointly represent a quantity; may include numbers, variables, and operation symbols.

\(x\)

A symbol commonly used to denote a variable in equations and functions.

Binomial Theorem

A fundamental theorem in algebra that describes the algebraic expansion of powers of a binomial.