1) Sam Fish contributed Fishacre to the FF Catfish Partnership. At that time, the property was subject to a $75,000 nonrecourse mortgage; it had an $80,000 fair market value and a $50,000 basis. The amount of Sam’s debt relief from the contribution was equal to the amount of existing liabilities he assumed from the partnership. i.e. the net was zero.
a) What basis does the partnership take in Fishacre?
b) If Fishacre were immediately surrendered in satisfaction of the liability, would there be a gain and if so to which partner would it be allocated?