Required information When High Horizon LLC was formed, Maude contributed the fol

Question

Required information

When High Horizon LLC was formed, Maude contributed the following assets in exchange for a 25 percent capital and profits interest in the LLC:

*Nonrecourse debt secured by the land equals $162,000

James, Harold, and Jenny each contributed $248,750 in cash for a 25 percent profits and capital interest. (Leave no answer blank. Enter zero if applicable.)

d. What is High Horizon’s tax basis in its assets?

      

Basis Fair Market Value Maude: Cash $ 25,000 $ 25,000 Land* 115,000 385,750 Totals $ 140,000 $ 410,750

Explanation / Answer

High Horion's tax basis in its assets = (25000+385750+410750-162000)+248750+248750+248750 = $1405750

We consider the fair value of the assets in calculation of the tax basis & the value of debt will be reduced from it.

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