G and L form a limited partnership. G, the general partner, contributes $80,000 and L, the limited partner, contributes $320,000. The partnership purchases commercial real estate on leased land, paying $400,000 cash and borrowing $1,600,000 on a nonrecourse basis from a commercial lender. The terms of the loan require payment of interest only for the first five years. The GL partnership agreement allocates all income, gain, loss, and deductions 20% to G and 80% to L until the first time that the partnership has recognized items of income and gain that exceed the items of loss and deduction recognized over its life, and then all further partnership items are to be allocated equally between G and L. At the time the partnership agreement is entered into, there is a reasonable likelihood that, over the partnership’s life, it will recognize amounts of income and gain significantly in excess of losses and deductions. The partnership agreement requires that all allocations are to be reflected in appropriate adjustments to the partners’ capital accounts and liquidation proceeds are to be distributed in accordance with positive capital account balances. Only G is required to restore a capital account deficit. The partnership agreement contains a qualified income offset for L and a minimum gain chargeback provision. Finally, the agreement provides that all nonliquidating distributions will be made 20% to G and 80% to L until a total of $400,000 has been distributed, and thereafter such distributions will be made equally to G and L. The partnership depreciates its property using the straight-line method over a valid (you may assume) 10-year recovery period. a) Assume that rental income from the property of $150,000 equals operating expenses (including interest on the nonrecourse debt) of $150,000. Determine the allocation of the partnership’s cost recovery deductions in each of the first three years of operations and determine the partners’ capital accounts at the end of each year. Remember to allocate the $1,600,000 liability between the partners according to their profits interests and to adjust their outside bases accordingly.