nt property worth $690,000, purchased two years ago fo nt profits and capital interest in the LLC. Cloud Peak owe LLC interest?
nt property worth $690,000, purchased two years ago fo nt profits and capital interest in the LLC. Cloud Peak owe LLC interest?
Chapter3: Income Sources
Section: Chapter Questions
Problem 73P
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Transcribed Image Text:Lance contributed investment property worth $690,000, purchased two years ago for $277,500 cash, to Cloud Peak LLC
in exchange for an 85 percent profits and capital interest in the LLC. Cloud Peak owes $505,000 to its suppliers but has
no other liabilities.
a. What is Lance's tax basis in his LLC interest?
Tax basis
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Introduction
The tax basis of an asset is the same as its cost basis. Determining such expenses may involve allocations in circumstances when many assets are purchased at the same time. Depreciation allowances can be deducted from the tax base. A decreased tax basis is referred to as a modified tax basis.
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