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Phoebe and Parker are equal members in the Phoenix Investment Group LLC. Phoebe contributed land with an A/B of $25,000 and a FMV of $90,000. Parker contributed $90,000 cash. They agreed to share profits and losses equally. Three years after the formation of the partnership, the land contributed by Phoebe was sold for $100,000. a. What is the realized and recognized gain on the sale of the land? b. How is the gain from the sale of the land allocated in the tax bases of the members?

Phoebe and Parker are equal members in the Phoenix Investment Group LLC. Phoebe contributed land with an A/B of $25,000 and a FMV of $90,000. Parker contributed $90,000 cash. They agreed to share profits and losses equally. Three years after the formation of the partnership, the land contributed by Phoebe was sold for $100,000. a. What is the realized and recognized gain on the sale of the land? b. How is the gain from the sale of the land allocated in the tax bases of the members?

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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Phoebe and Parker are equal members in the Phoenix Investment Group LLC. Phoebe contributed land with an A/B of $25,000 and a FMV of $90,000. Parker contributed $90,000 cash. They agreed to share profits and losses equally. Three years after the formation of the partnership, the land contributed by Phoebe was sold for $100,000. a. What is the realized and recognized gain on the sale of the land? b. How is the gain from the sale of the land allocated in the tax bases of the members?
Transcribed Image Text:Phoebe and Parker are equal members in the Phoenix Investment Group LLC. Phoebe contributed land with an A/B of $25,000 and a FMV of $90,000. Parker contributed $90,000 cash. They agreed to share profits and losses equally. Three years after the formation of the partnership, the land contributed by Phoebe was sold for $100,000. a. What is the realized and recognized gain on the sale of the land? b. How is the gain from the sale of the land allocated in the tax bases of the members?
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