Samaya helps form Fish Ltd with a contribution of equipment with an FMV of $200,000 and a
Question:
Samaya helps form Fish Ltd with a contribution of equipment with an FMV of $200,000 and a basis of $100,000. After the formation, she owns 80% of the entity. During the year Samaya lends $10,000 to Fish, and Fish borrows an additional $20,000 from Wells Fargo to finance its operations. In addition, Fish reports the following activity: Revenues $100,000 COGS (90,000) Long-term Capital Gain 10,000 Payments to Samaya for services performed (70,000) In addition Fish distributed property with an FMV of $80,000 and basis of $70,000 to Samaya.
Required: What are Samaya’s ending basis in the entity, net effect on taxable income, and total taxes paid if Fish is organized as a:
1) LLC
2) S-corp
Assume Samaya has sufficient at-risk basis to absorb any passed through losses. You can also assume that she is a single taxpayer in the 32% tax bracket.
Expert Answer:
Answer 1 Limited Liability Company LLC is a corporate business corporation in the United States which incorporates corporate features Limited liabilit... View the full answer
