Problem 10-27 (Algorithmic) (LO. 3, 9, 14)

Kenisha and Shawna form the equal KS LLC, with a cash contribution of $724,000 from Kenisha and a property contribution (adjusted basis of $760,200, fair market value of $724,000) from Shawna.

If an amount is zero, enter "0".

Question Content Area

a. How much gain or loss, if any, does Shawna realize on the transfer? Does Shawna recognize any gain or loss? If so, how much? Shawna has realized

of $fill in the blank , of which $fill in the blank is recognized.

b. What is Kenisha's tax basis in her LLC interest? $fill in the blank The 704(b) book basis? $fill in the blank

c. What is Shawna's tax basis in her LLC interest? $fill in the blank The 704(b) book basis? $fill in the blank

d. What tax basis does the LLC take in the property transferred by Shawna? $fill in the blank

e. Are there more effective ways to structure the formation?