Assume the same facts as in Problem 40, with the following exceptions:

• Reece purchased the land five years ago for $120,000. Its fair market value was $90,000 when it was contributed to the LLC.

• A few years later, Phoenix sold the land contributed by Reece for $84,000.

a. How much is the recognized gain or loss? How is it allocated among the LLC members?

b. Prepare a balance sheet reflecting basis and fair market value for the LLC immediately after the land sale. Also prepare schedules that support the basis and fair market value of each LLC member’s capital account.