When High Horizon LLC was formed, Maude contributed the following assets in exch

Question

When High Horizon LLC was formed, Maude contributed the following assets in exchange for a 25 percent capital and profits interest in the LLC: Basis Fair Market Value Maude: Cash $ 31,000 $ 31,000 Land* 114,000 430,750 Totals $ 145,000 $ 461,750 *Nonrecourse debt secured by the land equals $186,000 James, Harold, and Jenny each contributed $275,750 in cash for a 25 percent profits and capital interest. d. What is High Horizon’s tax basis in its assets? e. Prepare a tax basis balance sheet for the High Horizon LLC showing the tax capital accounts for the members.

Explanation / Answer

Maude Basis Fair Market Value Cash $31,000 $31,000 Land 114000 430750 Total $145,000 $461,750 Ans C High horizon tax basis in the Assets 114000+827250 941250 Ans $114000 carryover basis in the assets of Maude contributes $275750 each for 3 partners 275750*3= 827250 $827250 basis in total cash of James.Harold and Jenny Ans d High Horizon Tax Basis Balance Sheet Tax basis Assets Cash $858,250 Land 114000 Total $972,250 Liabilities & Capital Mortgage Debt $186,000 Capital-Maude(145000-186000) ($41,000) Capital-James 275750 Capital-Harold 275750 Capital-Jenny 275750 Total $972,250

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