Lydia and Oliver wish to form a partnership to conduct a new business. They each contribute the following assets in exchange for equal interests in LO Partnership. Lydia's tax basis in the contributed equipment is $22,000 and Oliver's tax basis in the contributed equipment is $57,000. Lydia Oliver
Cash $50,000 $70,000
Business equipment (FMV)​50,000 30,000
a. Compute each individual's realized and recognized gain or loss on the formation of LO Partnership.
b. Compute each individual's tax basis in their half interest in LO Partnership.
c. Compute the partnership's tax basis in the equipment contributed by each individual partner.
Yes, the question is based on U. S. taxation.