2: Note: LLCs are taxed in the same manner as a partnership.

Phoebe and Parker are equal members of Phoenix Investors LLC. They are real estate investors who formed the LLC several years ago with equal cash contributions. Phoenix then purchased a parcel of land. On January 1 of the current year, to acquire a one-third interest in the entity, Reece contributed to the LLC some land she had held for investment. Reece purchased the land five years ago for $75,000; its FMV at the contribution date was $90,000. No special allocation agreements were in effect before or after Reece was admitted to the LLC. Phoenix holds all land for investment purposes and conducts a non-real estate active business. Phoenix Investors has no debt. Immediately before Reece's property contribution, the balance sheet of Phoenix Investors LLC was as follows:

	Basis	FMV		Basis
Land	$30,000	$180,000	Phoebe P/S interest	$15,000
			Parker, P/S interest	$15,000
Totals	$30,000	$180,000

a. At the contribution date, what is Reece's basis in her interest in the LLC?

b. What is the LLC's holding period for the land Reece contributed?

c. What is Phoenix Investors basis in the land contributed by Reece?

d. On June 30 of the current year, the LLC sold the land contributed by Reece for $90,000. How much is the recognized gain or loss? How is the recognized gain/loss allocated among the LLC members?

Assume the same facts as in Problem 2 above, with the following exceptions:

Reece purchased the land five years ago for $120,000. Its FMV 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. At the contribution date, what is Reeces basis in her interest in the LLC?

b. What is the LLCs holding period for the land Reece contributed?

c. What is Phoenix Investors basis in the land contributed by Reece?

d. On June 30, the LLC sold the land contributed by Reece for $84,000. How much is the recognized gain or loss? How is the recognized gain/loss allocated among the LLC members?

e. Calculate the basis of each LLC ownership interest after the land sale.