Solution-The depreciation deductions to mark once the book

The depreciation deductions to mark once the book value

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Reference no: EM131749670

1. Mark and Jeremy form an LLC. Mark is the manager and contributes $50,000 and Jeremy contributes $50,000. The LLC borrows $900,000 on a nonrecourse basis, and the members agree to share profits and losses equally. The LLC uses its $1,000,000 to buy a building.

a. What is the outside basis of each member?

b. Assume the LLC specially allocates all the depreciation deductions to Mark once the book value of the building drops below $900,000. Assuming the allocations are valid under the Sec 704(b) regulations, compute the members' shares of liability when the book value of the building has been reduced to $600,000 from depreciation deductions.

c. Instead of cash, Jeremy contributes property, with a tax basis of zero and a value of $250,000, subject to a $200,000 nonrecourse liability. Mark contributes $50,000 cash and the LLC borrows $900,000. The LLC uses its $950,000 cash to buy the building. The $900,000 loan is secured by the building. Compute each partner's share of the LLC"s nonrecourse liabilities.

Reference no: EM131749670

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The depreciation deductions to mark once the book value

Reference no: EM131749670

Reference no: EM131749670

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