Equal members Stu Price and Doug Billings form Smiles, LLC, a dental practice. Price contributes assets from his existing practice. Price contributed cash basis accounts receivables of $15,000 (since cash basis there is a $0 tax basis for the receivables) and depreciated equipment (Equipment # 1) with a fair market value of $21,000 and adjusted basis of $3,000. The equipment has a three year remaining recovery period.

Billings is new to the profession and contributes equipment (Equipment #2) he purchased for $36,000 from a retiring practitioner.

Required 1

1. Compute the members Tax and 704(b) "Book" basis in the LLC in their Capital Accounts and specific asset accounts after initial contribution of property to Smiles, LLC.

Member Capital, Stu Price Accounts Receivable	Tax Basis $ _ $ _	Book Basis $ _ $ _
Equipment #1	$ _	$
Capital, Doug Billings	$	$
Equipment #2	$ _	$

1. Compute the LLCs tax basis in the property contributed to Smiles, LLC.

Tax Basis

Accounts Receivable $

Equipment #1 $

Equipment #2 $