On January 2 of the current year, Fenton and Myers form the FM LLC. Their contributions...

 

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On January 2 of the current year, Fenton and Myers form the FM LLC. Their contributions to the LLC are as follows. Adjusted Basis Fair Market Value From Fenton: Cash Accounts receivable Inventory From Myers: Land $80,000 0 40,000 374,000 $80,000 144,000 100,000 324,000 FM originally intended to hold the inventory as investment property. Myers held the land as long-term investment property, but FM will use it in its business as a § 1231 asset. Within 30 days of formation, FM collects the receivables. Two years later, FM sells the inventory contributed by Fenton for $100,000 cash. After three years, FM sells the land for $324,000. FM realized the following income in the current year from these transactions: of $ of from collecting cash basis accounts receivable. from sale of inventory. For the land sale, FM recognizes a $ These rules exist to ensure that a partner and partnership character of the underlying deferred income, gain, loss, or deduction. property between themselves and alter the inherent On January 2 of the current year, Fenton and Myers form the FM LLC. Their contributions to the LLC are as follows. Adjusted Basis Fair Market Value From Fenton: Cash Accounts receivable Inventory From Myers: Land $80,000 0 40,000 374,000 $80,000 144,000 100,000 324,000 FM originally intended to hold the inventory as investment property. Myers held the land as long-term investment property, but FM will use it in its business as a § 1231 asset. Within 30 days of formation, FM collects the receivables. Two years later, FM sells the inventory contributed by Fenton for $100,000 cash. After three years, FM sells the land for $324,000. FM realized the following income in the current year from these transactions: of $ of from collecting cash basis accounts receivable. from sale of inventory. For the land sale, FM recognizes a $ These rules exist to ensure that a partner and partnership character of the underlying deferred income, gain, loss, or deduction. property between themselves and alter the inherent

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FM realized the following income in the current year from these transactions For the la... View the full answer