Burke transfers cash in the amount of $40,000 and retail display fixtures (basis of $8,000 and fair market value of $20,000) in exchange for a 60% profit and loss interest in Honey Bee's Basement, LLC a children's clothing store. Her 60% interest is valued at $60,000. Will Burke recognize a gain or loss on this transaction? If so, how much?
Burke transfers cash in the amount of $40,000 and retail display fixtures (basis of $8,000 and fair market value of $20,000) in exchange for a 60% profit and loss interest in Honey Bee's Basement, LLC a children's clothing store. Her 60% interest is valued at $60,000. Will Burke recognize a gain or loss on this transaction? If so, how much?
Chapter13: Choice Of Business Entity—general Tax And Nontax Factors/formation
Section: Chapter Questions
Problem 50P
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Transcribed Image Text:Burke transfers cash in the amount of
$40,000 and retail display fixtures (basis of
$8,000 and fair market value of $20,000) in
exchange for a 60% profit and loss interest in
Honey Bee's Basement, LLC a children's
clothing store. Her 60% interest is valued at
$60,000. Will Burke recognize a gain or loss
on this transaction? If so, how much?
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