Cate, Alex and Liz form an CAL, LLC$.$ Cate has a $60\%$ capital and profits interest and Alex and Liz each have a $20\%$ capital and profits interest. Cate and Alex are actively involved in the LLC operations.

Cate: Contributes $$140,000$ and equipment $($FMV of $$30,000$; adjusted basis $$10,000).$ The equipment is subject to a nonrecourse loan of $$20,000.$

Alex: Contributes a land $($FMV $$50,000$; adjusted basis $$30,000).$

Liz: Contributes $$50,000$ cash.

$$10,000.$ During the year, the LLC borrowed $$30,000.$ The loan was guaranteed by the partners $($Cate guaranteed $60\%$ and Alex guaranteed $40\%).$

$$10,000$ of the recourse loan.

member's share of debt included in basis is as follows at the end of Year $4$: Cate: $$16,000$; Alex $$2,000$; Liz $$2,000.$

Year $5$: On Jan. $1$ of Year $5,$ Liz decides to liquidate her interest in the LLC$.$ She is relieved of her liabilities and receives the following proportionate liquidating distribution:

Cash $$15,000$ & real property $($FMV $$50,000$ and adjusted basis $$30,000).$