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preparation of the tax workpapers for your clients, read through the background for Custom Bikes in order to determine allocations for the fferent liabilities. ackground John Jonathan and Tom Thompson decide to form a partnership called Custom Bikes on January 1, 2022. John contributes cash for a 40% interest in capital and profits. Tom contributes equipment with a basis of $10,000 and an FMV of $30,000 for the other 60% interest in capital and profits. On January 1,2022 , the partnership bought machinery for use in its business by spending $20,000 cash and incurring a non-recourse liability of $40,000. The loan agreement stipulates that no payments need to be made until the seventh year. In addition, the machinery will be depreciated over five years (using straight-line depreciation and beginning with a full year of depreciation in 2022). Since the cash that John contributed is being used to purchase this property, the partners have agreed to split the depreciation equally ( 50% to each partner). Based on this information, prepare the tax workpopers using an Excel document, in which you determine and report each partner's basis at the end of Year 1 (2022). Be sure to indicate the adjustments that would be made to each partner's basis ot the end of Year 4 (2025)

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