Your clients, Lisa and Matthew, plan to form Lima General Partnership. Lisa will contribute $50,000 cash to Lima for 50% interest in capital and profits. Matthew will contribute land having a $35,000 adjusted basis and a $50,000 FMV to Lima for the remaining 50% interest in capital and profits. Lima will borrow additional funds of $100,000 from a bank on a recourse basis and then will subdivide and sell the land. Prepare a draft memorandum for your tax manager's signature outlining the tax treatment for the partnership formation transaction. As part of your memorandum, compare the reporting of this transaction on the tax and financial accounting books. References:

IRC Sec. 721

Accounting Standards Codification (ASC) 845 (Nonmonetary Transactions)