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Exhibit 2 illustrates the difference between E's outside basis and inside basis, including cash, liabilities, and gain calculations.

Table showing E's outside and inside basis in Example 3, comparing cash paid for partnership interest, share of partnership liabilities, and gain on hypothetical liquidation.

Table showing E's outside and inside basis in Example 3, comparing cash paid for partnership interest, share of partnership liabilities, and gain on hypothetical liquidation.

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