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 LIC Fa Market BasisValue Maude: Cash Land" $ 33,008 $ 33,808 128,80 387,259 $161,8ee $428,25e Nonrecourse debt secured by the land equals $191,500 James. Harold, and Jenny each contributed $228,750 in cash for a 25 percent profits and capital interest (Leave o answer blenk. Enter zero if applicable.) b. What is Maude's tax basis in her LLC interest?

Explanation / Answer

S.No.

Description

Maude

Other Members

Comments

1

Basis in contributed land

128000

2

Cash contributed

33000

228750

3

Non recourse mortgage in excess of basis in contrabuted land

37250

228750 - 191500

4

Remaining non recourse mortgage

38562.5

38562.5

(191500 - 37250) * 25%

Basis immediately prior to debt relief

236812.5

Sum of all above

5

Relief from mortgage debt

-191500

1+2+3+4

Each member’s initial tax basis in LLC

45312.5

267312.5

1+2+3+4+5

(b) $45,312.50 (Refer to column 3 of table above)

(c) $267,312.50 (Refer to column 4 of table above)

(d)

Carryover basis of Maude in assets contributed = 161,000

Basis in total cash of other three members = 228,750 * 3 = 686,250

High Horizon's tax basis = 161,000 + 686,250 = $847,250

(e)

Assets:

Cash

719250

Land

128000

Totals

847250

Liabilities and Capital:

Mortgage debt

191500

Capital - Maude

-30500

Capital - James

228750

Capital - Harold

228750

Capital - Jenny

228750

Totals

847250

S.No.

Description

Maude

Other Members

Comments

1

Basis in contributed land

128000

2

Cash contributed

33000

228750

3

Non recourse mortgage in excess of basis in contrabuted land

37250

228750 - 191500

4

Remaining non recourse mortgage

38562.5

38562.5

(191500 - 37250) * 25%

Basis immediately prior to debt relief

236812.5

Sum of all above

5

Relief from mortgage debt

-191500

1+2+3+4

Each member’s initial tax basis in LLC

45312.5

267312.5

1+2+3+4+5

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