What is the character of any gain or income recognized

Assignment Help Financial Accounting

Reference no: EM131222656

Sam and Drew are equal partners in SD LLC formed on June 1 of the current year. Sam contributed land that he inherited from his uncle in 2007. Sam’s uncle purchased the land in 1982 for $30,000. The land was worth $100,000 when Sam’s uncle died. The fair market value of the land was $200,000 at the date it was contributed to the partnership.

Drew has significant experience developing real estate. After the LLC is formed, he will prepare a plan for developing the property and secure zoning approvals for the LLC. Drew would normall bill a third party $50,000 for these efforts. Drew will also contributed $150,000 cash in exchange for his 50% interest in the LLC. The value of his 50% interest is $200,000.

How much gain or income will Sam recognize on his contribution of the land to the LLC? What is the character of any gain or income recognized?

What basis will Sam take in his LLC interest

How much gain or income will Drew recognize on the formation of the LLC? What is the character of any gain or income recognized?

What basis will Drew take in his LLC interest?

Reference no: EM131222656

Questions Cloud

Used to enhance their product line and vision : After delivering your speech, you have been approached by representatives from Oracle (Oracle Financials) and Microsoft (Microsoft Dynamics) regarding your key points. From the second e-Activity, evaluate how your message can be used to enhance their..

Operating section of the statement of cash flows : Which of the following will be listed in the operating section of the statement of cash flows that is prepared using the indirect? method?

Conferences on the future of accounting information systems : The AICPA would like for you to deliver a speech at one of its upcoming conferences on the future of accounting information systems. From the first e-Activity, select one conference and formulate the takeaway message and key points that you would wan..

Prepare a bank reconciliatio : How would I prepare a bank reconciliation for the following information? The August 31 balance shown on the bank statement is $9,810. There is a deposit in transit of $1,260 at August 31. Outstanding checks at August 31 totaled $1,890. Interest cred..

What is the character of any gain or income recognized : Sam and Drew are equal partners in SD LLC formed on June 1 of the current year. Sam contributed land that he inherited from his uncle in 2007. Sam’s uncle purchased the land in 1982 for $30,000. How much gain or income will Sam recognize on his contr..

There were no other transaction costs or finance charges : Audrey Sanborn has just arranged to purchase a $570,000 vacation home in the Bahamas with a 30 percent down payment. The mortgage has a 6.3 percent APR, compounded monthly, and calls for equal monthly payments over the next 30 years. There were no ot..

Fifo and lifo using a periodic system : Cost flow assumptions—FIFO and LIFO using a periodic system The beginning inventory was 600 units at a cost of $20 per unit. Goods available for sale during the year were 2,600 units at a total cost of $57,600. Calculate the number of units purchased..

What is accounting valuation basis for consolidating assets : What is the accounting valuation basis for consolidating assets and liabilities in the business combination? What percentage ownership does the parent have in one of the subsidiaries reported? Are there any outside interests that have been accounted ..

Summarize what debits and credits are : Summarize what debits and credits are. How do they relate to the accounting equation? When are they used? Give an example of a transaction using both debits and credits as well as the accounting equation.

User Account

All Pages