A single member LLC becomes an entity with more than one owner. The LLC created by

$"$A$"$ originally had two LT assets. Asset #$1$ has a basis of $$2,000.$ Asset #$2$ has a basis of

$$4,000.$ Total basis of $$6,000."B"$ who is not related to $"A",$ contributes $$10,000$ to the

LLC in exchange for a $50\%$ ownership interest in the LLC$.$ Accordingly, the entity is now

classified as a partnership. The LLC uses all of the contributed cash in its business. $"A"$ and

$"$B$"$ continue to operate the business as co$-$owners of the LLC$.$ What are the federal

income tax consequences?

A$\text{'}$s holding period in his partnership interest will be LT and B$\text{'}$s holding period will be short term.

There is no gain or loss to A or B $.$ There was not a sale or exchange.

B$\text{'}$s basis in his partnership interest is the $$10,000$ he paid to the partnership.

All of the aforementioned items will be the federal income tax consequence of this transaction.