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:

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The cognitive bias to believe that the world is inherently fair, leading people to rationalize injustice as deserved by the victim.

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A psychological state where an individual loses self-awareness and self-restraint, often occurring within group settings that foster anonymity.

Ingroup Bias

The tendency to favor one's own group over other groups, leading to preferential treatment and positive evaluations of group members.