Abel and Brandon each owns a small Cessna airplane. Each airplane was acquired five years ago for $6 million and is being depreciated on a straight-line basis over a 10-year recovery period. After having been depreciated for five years, each airplane retains a fair market value of $6 million, but has a tax basis of $3 million. Also, each airplane secures nonrecourse indebtedness of $3 million. Abel and Brandon agree to contribute their respective airplanes, encumbered by those airplanes' accompanying nonrecourse indebtedness, to a new limited lability company, FlightTaxi LLC, which they form to run a flying taxi business, along with a third individual called Cain. Each airplane would have had a 10-year recovery period if FlightTaxi LLC had purchased it at the time it was contributed. Cain agrees to provide $3 million in cash to FlightTaxi LLC for working capital, so that Abel, Brandon, Cain each owns one-third of FlightTaxi LLC.

The operating agreement of FlightTaxi LLC: (1) provides for equal allocations of all items of income, gain, profit, loss, deduction, and credit; (2) complies with the safe harbor for allocating nonrecourse deductions specified in Treasury Regulations 1.704-2(e); and (3) makes a 754 election.

In each of the first three years after its formation, before depreciation, FlightTaxi LLC operates on a break-even basis; i.e., income equals expenses, including interest on the non-recourse debt. No principal is repaid on the nonrecourse indebtedness encumbering the airplanes during these three years. Three years after FlightTaxi LLC has been in business, each airplane continues to retain a fair market value of $6 million. On the third anniversary of FlightTaxi LLC's formation, Cain gets into a violent argument with Abel. Concluding that he no longer wants to remain in business with Abel and Brandon, Cain sells his one-third interest in FlightTaxi LLC to an unrelated individual, Damien, for $3 million in cash.

What are the tax consequences of this sale to: Cain; Damien; and FlightTaxi LLC?