answer according to tax for corp entities Assume that all partnership interests expressed as percentages are those percentages of both profits/losses and capital. Assume that all liabilities are recourse.

1) Three individuals, C, D, and E, form CDE LLC. CDE LLC does not check the box to become a corporation and therefore is treated as a partnership for tax purposes.

(a) C contributes land, adjusted basis $70 fair market value $100 and cash of $20. D contributes inventory (in the hands of both D and CDE), adjusted basis $50 fair market value $120. E contributes services. In exchange, each partner receives a 1/3 interest in the LLC. What are the consequences to all of the parties?

(b) Same as (a) except that Cs land is subject to an assumable mortgage of 30 and has a fair market value of 130. 2) C and D, both individuals, are 60% and 40% partners, respectively, in the CD partnership. C starts the year with an adjusted basis of 600 in his partnership interest, while D has an initial adjusted basis of 400 in her partnership interest.

(a) For the year, the partnership has sales of 300, cost of goods sold of 230, T-bill interest income of 30, a long-term capital gain of 150, charitable contributions of 30 and payroll costs of 60. How do these facts impact the parties for tax purposes?

(b) Same as (a) except that the LTCG of 150 was from stock contributed by C which at the time of contribution had an adjusted basis of 160 and a fair market value of 300.

3) C and D are equal partners in the CD partnership.

(a) C starts the year with an adjusted basis of $200 in the partnership while D starts the year with an adjusted basis of $1,500. The partnership incurs a loss of $1,000 for the year. What consequences to the parties?

(b) Continuing the facts of (a), in the subsequent year, CD earns a profit of $300.

4) C and D are equal partners in the CD partnership. C starts the year with an adjusted basis of $400 in the partnership while D starts the year with an adjusted basis of $700.

(a) The partnership distributes cash of$ 500 to C and land, adjusted basis $300 fair market value $500 to D. The partnership thereafter continues operations. What consequences?

(b) Same as (a) except that the land had an adjusted basis of $800 (fair market value still $500).

(c) Same as (a) except that the land had a fair market value of $600 and subject to liabilities of $100.

(d) Same as (c) (land has adjusted basis $300, fair market value $600, subject to a liability of $100) except that the distributions were in liquidation of the partnership.

5. C and D are equal partners in the CD partnership. C starts the year with an adjusted basis of $300 in his partnership interest while D starts the year with an adjusted basis of $600. The partnership distributes cash of $200 and inventory, adjusted basis $450 fair market value $500, to C and cash of $200 and land, adjusted basis $300, fair market value $700, subject to a liability of $200, to D. The partnership continues operation thereafter. What consequences to the parties?

according to US tax laws