both book and tax. Show how book and tax depreciation will be allocated among
the partners.

$
$
$
$
b.
Does the curative allocation of depreciation on complex 2 from L to M and N
completely “cure” the discrepancy caused by the ceiling rule with respect to the
allocation of depreciation on complex 1?

c.
How can the partnership eliminate the remaining discrepancy?

7.3
: A and B form the equal AB partnership. A contributes property (FMV = $100,000,
basis = $30,000) and B contributes $100,000 cash. The property has three years
remaining on its 10 year life. The partnership uses the remedial allocations method to
eliminate ceiling rule disparities. Under Code Sec. 704(c), how much of tax depreciation
with respect to the contributed property in the first year will be allocated to B? Assuming
a remedial allocation is made, how much will it be? What will be its character?