58. This year, Callie and Neil formed CN LLC. Callie contributed $300,000 of cash, and Neil contributed real estate valued at $450,000 (basis of $200,000). The property was subject to a recourse liability of $150,000 that was assumed by the LLC, but which is not guaranteed by either LLC member. Callie and Neil’s profit sharing ratios are 40%/60%, respectively, but the loss sharing ratios are 50%/50%. Is the debt treated as a recourse debt or a nonrecourse debt to the LLC members? How is the debt allocated between Callie and Neil? What are Neil’s and Callie’s bases in the LLC interest immediately after the LLC was formed? Show your calculations.
58. This year, Callie and Neil formed CN LLC. Callie contributed $300,000 of cash, and Neil contributed real estate valued at $450,000 (basis of $200,000). The property was subject to a recourse liability of $150,000 that was assumed by the LLC, but which is not guaranteed by either LLC member. Callie and Neil’s profit sharing ratios are 40%/60%, respectively, but the loss sharing ratios are 50%/50%. Is the debt treated as a recourse debt or a nonrecourse debt to the LLC members? How is the debt allocated between Callie and Neil? What are Neil’s and Callie’s bases in the LLC interest immediately after the LLC was formed? Show your calculations.
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter14: Partnerships And Limited Liability Entities
Section: Chapter Questions
Problem 8P
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58. This year, Callie and Neil formed CN LLC. Callie contributed $300,000 of cash, and Neil contributed real estate valued at $450,000 (basis of $200,000). The property was subject to a recourse liability of $150,000 that was assumed by the LLC, but which is not guaranteed by either LLC member. Callie and Neil’s profit sharing ratios are 40%/60%, respectively, but the loss sharing ratios are 50%/50%. Is the debt treated as a recourse debt or a nonrecourse debt to the LLC members? How is the debt allocated between Callie and Neil? What are Neil’s and Callie’s bases in the LLC interest immediately after the LLC was formed? Show your calculations.
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