es cash of $120. B contributes er, the land is sold to a third pa justed basis) is allocated betv method or the new regulation - be casier as you do not ha

SWFT Comprehensive Volume 2019
42nd Edition
ISBN:9780357233306
Author:Maloney
Publisher:Maloney
Chapter21: Partnerships
Section: Chapter Questions
Problem 43P
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A and B form an LLC. A contributes cash of $120, B contributes land worth $120 with
an adjusted basis of $20. Six years later, the land is sold to a third party for $900. Compute
how the gain of $880 ($900 - $20 adjusted basis) is allocated between the two members.
You can use either the old regulation method or the new regulation method to allocate the
gain. The old regulation method may be casier as you do not have to use book capital
accounts to make the computation.
Transcribed Image Text:A and B form an LLC. A contributes cash of $120, B contributes land worth $120 with an adjusted basis of $20. Six years later, the land is sold to a third party for $900. Compute how the gain of $880 ($900 - $20 adjusted basis) is allocated between the two members. You can use either the old regulation method or the new regulation method to allocate the gain. The old regulation method may be casier as you do not have to use book capital accounts to make the computation.
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