Jim and Marta Created the JM Partnership by Contributing $60,000

Essay

Jim and Marta created the JM Partnership by contributing $60,000 each.The $120,000 cash was used by the partnership to acquire a depreciable asset.The partnership agreement provides that the partners' capital accounts will be maintained in accordance with Reg.§ 1.704-1(b)(the "economic effect" Regulations)and that any partner with a deficit capital account will be required to restore that capital account when the partner's interest is liquidated.The partnership agreement provides that MACRS will be allocated 10% to Jim and 90% to Marta.All other items of partnership income,gain,loss,deduction,and credit will be allocated equally between the partners.In the first year,MACRS is $20,000 and no other operating transactions occur.The property is sold at the end of the year for $100,000 and the partnership is liquidated immediately thereafter.
To satisfy the economic effect test,how much of the $100,000 cash (from the sale)is allocated each to Jim and Marta?