Assume the same facts as in Problem 48, except that Suz-Anna was formed as an LLC instead of a general partnership.

a. How would Suz-Anna’s ending liabilities be treated?

b. How would Suzy’s basis and amount at risk be different?

Problem 48

Suzy contributed assets valued at $360,000 (basis of $200,000) in exchange for her 40% interest in Suz-Anna GP (a general partnership). Anna contributed land and a building valued at $640,000 (basis of $380,000) in exchange for the remaining 60% interest. Anna’s property was encumbered by a qualified nonrecourse debt of $100,000, which was assumed by the partnership.
The partnership reports the following income and expenses for the current tax year:
Sales ........................................................................................... $560,000
Utilities, salaries, and other operating expenses ........ 360,000
Short-term capital gain ........................................................... 10,000
Tax-exempt interest income ................................................... 4,000
Charitable contributions .......................................................... 8,000
Distribution to Suzy ................................................................. 10,000
Distribution to Anna ............................................................... 20,000