Joel and Desmond Are Forming the JD Partnership

Essay

Joel and Desmond are forming the JD Partnership.Joel contributes $300,000 cash and Desmond contributes nondepreciable property with an adjusted basis of $80,000 and a fair market value of $330,000.The property is subject to a $30,000 liability,which is also transferred into the partnership and is shared equally by the partners for basis purposes.Joel and Desmond share in all partnership profits equally except for any precontribution gain,which must be allocated according to the statutory rules for built-in gain allocations.