8. In the following Code citation, how would you refer to the (k), (2), (B), (i) and (III) using the proper terminology? Section 401(k)(2)(B)(i)(III)

Question #9. Leesa and Mason form Leeson, LLC.  Leesa and Mason agree to share profits and losses equally.  Leesa contributes land with a tax basis to Leesa of $800 and a fair market value of $1,000.  Mason contributes $1,000 cash.  Leeson, LLC sells the land three years after the formation of the LLC.  Assume Leeson, LLC sells the land for $1,300. 

How much tax gain is allocated to Leesa and how much tax gain is allocated to Mason upon the LLC’s sale of the land?

Question #10. XYZ, LLC, is treated as a partnership for income tax purposes.  The LLC has three equal members (i.e., they share in profits and losses 1/3 each).  Member X has an outside basis of $1,033. The LLC’s balance sheet shows cash of $3,100, nonrecourse liabilities that total $900, and partner capital of $2,200. The LLC has no other assets or liabilities. The LLC uses $300 of cash to pay down the liabilities from $900 to $600.

What impact does the reduction in the LLC’s liabilities have on Member X’s outside basis? What is Member X’s outside basis afterwards?