Mark, Gary, and Julie plan to form the 

$5350$ Kingsford LLC$.$ The entity will be taxed as a partnership. Mark owns land located at $5350$ Kingsford Avenue and he will contribute the land to the partnership. The land has an agreed$-$to FMV of $$3$ Million and a tax basis of $$800,000$ to Mark. Gary and Julie will each contribute $$1\mathrm{.}5$ Million to the LLC$.$

The LLC will then have $$6$ Million of capital. The partners intent is that everything will be shared one$-$third each, including capital. To make this work, the plan is to distribute $$1$ Million of cash to Mark sometime after formation. Mark will then have contributed a net of $$1\mathrm{.}5$ Million of value, just like the other two members.

The plan is expected to follow these dates:

By December $1,2023$ all capital was contributed.

The LLC will finalize its development plans for multifamily housing and arrange a development loan from the Seventh National Bank. The development loan is expected to be for $$45$ Million and will be funded as needed for construction. The parties expect the loan process to be completed by March $2024.$

After the plans are approved and the loan secured, so that it is certain the project will proceed, the LLC will distribute $$1$ Million to Mark.

What do you think the result of the distribution will be any why?

Answer rating: 100% (QA)

Based on the information provided the result of the distribution of 1 million to Mark after the plan... View the full answer