Liz and John formed the equal LJ Partnership on January 1 of the current year. Liz contributed $80,000 of cash and land with a fair market value of $90,000 and an adjusted basis of $75,000. John contributed equipment with a fair market value of $170,000 and an adjusted basis of $20,000. John had used the equipment in his sole proprietorship.

Do additional considerations arise because of the difference between the basis and fair market values of the property John contributed?

John's property has a $_________________ precontribution gain, so note that the partnership must allocate the depreciation expense between the partners in accordance with the § 704(c) Regulations.