Celeste contributed business-related assets valued at $250,000 (basis of CRITICAL THINKING $100,000)

Celeste contributed business-related assets valued at $250,000 (basis of CRITICAL THINKING $100,000) in exchange for her 50% interest in the Celestine Partnership. Ernestine contributed land and a building valued at $400,000 (basis of $200,000) in exchange for the remaining 50% interest. Ernestines property was encumbered by a qualified nonrecourse debt of $150,000, which was assumed by the partnership. The partnership reports the following income and expenses for the current tax year. At the end of the current tax year, Celestine held recourse debt of $100,000 for partnership accounts

Celeste contributed business-related assets valued at $250,000 (basis of CRITICAL THINKING $100,000) in exchange for her 50% interest in the Celestine Partnership. Ernestine contributed land and a building valued at $400,000 (basis of $200,000) in exchange for the remaining 50% interest. Ernestines property was encumbered by a qualified nonrecourse debt of $150,000, which was assumed by the partnership. The partnership reports the following income and expenses for the current tax year. At the end of the current tax year, Celestine held recourse debt of $100,000 for partnership accounts payable and qualified nonrecourse debt of $140,000. a. What is Celestes basis after formation of the partnership? Ernestines basis? b. What income and separately stated items does the partnership report on Celestes Schedule K1? What items does she report on her tax return? c. Assume all partnership debts are shared equally. At the end of the tax year, what are Celestes basis and amount at risk in her partnership interest?

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