Exercise 10-18 (Algorithmic) (LO. 3) On January 2 of the current year, Fenton and Myers form the FM LLC. Their contributions to the LLC are as follows. Adjusted Basis Fair Market Value From Fenton: Cash $182,500 $182,500 Accounts receivable 328,500 Inventory 91,250 228,125 From Myers: Land 789,125 739,125 FM originally intended to hold the inventory as investment property. Myers held the land as long-term investment property, but FM will use it in its business as a § 1231 asset. Within 30 days of formation, FM collects the receivables. Two years later, FM sells the inventory contributed by Fenton for $228,125 cash. After three years, FM sells the land for $739,125. FM realized the following income in the current year from these transactions: of $ from collecting cash basis accounts receivable. of $ from sale of inventory. For the land sale, FM recognizes a $ These rule exists to ensure that a partner and partnership property between themselves and alter the inherent character of the underlying deferred income, gain, loss, or deduction.

Exercise 10-18 (Algorithmic) (LO. 3) On January 2 of the current year, Fenton and Myers form the FM LLC. Their contributions to the LLC are as follows. Adjusted Basis Fair Market Value From Fenton: Cash $182,500 $182,500 Accounts receivable 328,500 Inventory 91,250 228,125 From Myers: Land 789,125 739,125 FM originally intended to hold the inventory as investment property. Myers held the land as long-term investment property, but FM will use it in its business as a § 1231 asset. Within 30 days of formation, FM collects the receivables. Two years later, FM sells the inventory contributed by Fenton for $228,125 cash. After three years, FM sells the land for $739,125. FM realized the following income in the current year from these transactions: of $ from collecting cash basis accounts receivable. of $ from sale of inventory. For the land sale, FM recognizes a $ These rule exists to ensure that a partner and partnership property between themselves and alter the inherent character of the underlying deferred income, gain, loss, or deduction.

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter4: Corporations: Organization And Capital Structure

Section: Chapter Questions

Problem 27P

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