Sweeney originally contributed $202,000 in cash for a one-fourth interest in the Gilbert LLC. During the several years that Sweeney was a member of the LLC, his share of the LLC's income was $121,200 and he withdrew $80,800 cash. The LLC's liabilities are $101,000, of which Sweeney's share is $25,250. The LLC has $50,500 of hot assets, of which Sweeney's share is $12,625. Sweeney sells his LLC interest to Jana for $266,640 cash, with Jana also assuming Sweeney's share of the LLC's liabilities.

How much is Sweeney's gain on the sale, and what is its character?

Sweeney's total gain on the sale is $______, of which $_______ recognized as ordinary income, with the remaining $________ recognized as a long-term capital gain.

How much is Jana's adjusted basis for her LLC interest? $______

Kenisha and Shawna form the equal KS LLC, with a cash contribution of $816,000 from Kenisha and a property contribution (adjusted basis of $856,800, fair market value of $816,000) from Shawna.

If an amount is zero, enter "0".

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 $, of which $ is recognized.

b. What is Kenisha's tax basis in her LLC interest? $

c. What is Shawna's tax basis in her LLC interest? $

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

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