Sean,Penelope,and Juan formed the SPJ partnership by each contributing assets with a basis and fair market value of $200,000.In the following year,Penelope sold her one-third interest to Pedro for $225,000.At the time of the sale,the SPJ partnership had the following balance sheet: 
Shortly after Pedro became a partner,SPJ sold the land for $475,000.What are the tax consequences of the sale to Pedro and the partnership (1)assuming there is no Section 754 election in place,and (2)assuming the partnership has a valid Section 754 election?
Definitions:
Top-Down
Describes an approach or management style where decisions and policies are initiated by the highest level of authority and then passed down through the ranks.
Markov Model
A stochastic model used to predict future states or outcomes based on current conditions and probabilistic transitions between states.
Projected Patterns
Forecasted trends or behaviors expected to occur based on analysis of historical data and current conditions.
Movement Analysis
The study of movement in order to identify patterns or inefficiencies for the purpose of improving performance or reducing the risk of injury.
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