Lance transferred land having a $180,000 FMV and a $105,000 adjusted basis,which is subject to a $150,000 mortgage in exchange for a one-third interest in the Trois Partnership.Lance acquired the land in 2002.The partnership owes no other liabilities.Lance,Rhonda,and Zach share profits and losses equally and each has an one-third interest in partnership capital.The tax effect to Lance is

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Since Lance transferred property with a FMV of $180,000 in exchange for a one-third interest in the partnership, his share of the partnership interest is worth $60,000 (one-third of the total partnership value of $180,000). This is less than the mortgage of $150,000 that the partnership assumed, so Lance did not receive any cash or property in addition to his partnership interest to recognize any gain or loss. Additionally, since Lance transferred property for a partnership interest, this qualifies as a non-taxable like-kind exchange under Section 721 of the Internal Revenue Code. Therefore, no gain or loss is recognized on the transfer.

Lance Transferred Land Having a $180,000 FMV and a $105,000