1) Identify and explain what are the "hot assets" in the Balance Sheet below?

2)What is the primary purpose of this rule?

3)From the below, classify TP's property as either hot assets or not hot assets and allocate the basis and value to each category.

*Be sure to provide supporting source of tax law

Pat sells his one- third interest in TP . a cash-basis , calendar year LLC , to Victor for $15 000 cash . The LLC is service-oriented and all members are treated as general partners ( i . e ., they are active members ) . The balance sheet of TP immediately before the sale is as follows Adjusted Basis per Books Market Value Cash $18 000 $18 000 Land 3000 6000 Receivable 9000 Inventory 6000 12000 Total $27 000 $45 000 Capital accounts Pat (1/3 ) $ 9000 $15 000 Thomas ( 2/ 3 ) 18000 30.000 Total $27000 $45000 The LLC uses the cash method , so revenue from the receivable has not been recognized