Capital gain/ ordinary income

Capital gain/ ordinary income

can transfer / cannot transfer

Exercise 21-19 (LO. 3) On January 2 of the current year, Fenton and Myers form the FM LLC. Their contributions to the LLC are as follows: Adjusted Basis Fair Market Value From Fenton: Cash $50,000 $50,000 Accounts receivable 0 90,000 Inventory 25,000 60,000 From Myers: Cash 200,000 200,000 Within 30 days of formation, FM collects the receivables and sells the inventory for $60,000 cash. FM realized the following income in the current year from these transactions: of $ from collecting cash basis accounts receivable. of $ from sale of inventory. This rule exists to ensure that a partner and partnership property between themselves and alter the inherent character of the underlying deferred income, gain, loss, or deduction