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Jokan contributes a nondepreciable asset to the Mahali LLC in exchange for a one-fourth (25%) interest in the LLC's capital and profits and a 30% interest in the LLC's losses. The asset has an adjusted tax basis to Jokan and the LLC of $90,000 and a fair market value and § 704(b) "book" basis on the contribution date of $162,000. The asset is encumbered by a nonrecourse note of $54,000

Jokan contributes a nondepreciable asset to the Mahali LLC in exchange for a one-fourth (25%) interest in the LLC's capital and profits and a 30% interest in the LLC's losses. The asset has an adjusted tax basis to Jokan and the LLC of $90,000 and a fair market value and § 704(b) "book" basis on the contribution date of $162,000. The asset is encumbered by a nonrecourse note of $54,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Exercise 10-24 (Algorithmic) (LO. 10) Jokan contributes a nondepreciable asset to the Mahali LLC in exchange for a one-fourth (25%) interest in the LLC's capital and profits and a 30% interest in the LLC's losses. The asset has an adjusted tax basis to Jokan and the LLC of $90,000 and a fair market value and § 704(b) "book" basis on the contribution date of $162,000. The asset is encumbered by a nonrecourse note of $54,000 that has not been guaranteed by any of the LLC members. How much of the nonrecourse debt is allocated to Jokan? What is the amount of Jokan's basis in the LLC interest following the contribution?
Transcribed Image Text:Exercise 10-24 (Algorithmic) (LO. 10) Jokan contributes a nondepreciable asset to the Mahali LLC in exchange for a one-fourth (25%) interest in the LLC's capital and profits and a 30% interest in the LLC's losses. The asset has an adjusted tax basis to Jokan and the LLC of $90,000 and a fair market value and § 704(b) "book" basis on the contribution date of $162,000. The asset is encumbered by a nonrecourse note of $54,000 that has not been guaranteed by any of the LLC members. How much of the nonrecourse debt is allocated to Jokan? What is the amount of Jokan's basis in the LLC interest following the contribution?
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