Exercise 10-18 (Algorithmic) (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 $130,000 $130,000 Accounts receivable 0 234,000 Inventory 65,000 162,500 From Myers: Land 576,500 526,500 FM originally intended to hold the inventory as investment property. Myers held the land as long-term investment property, but FM will use it in its business as a 1231 asset. Within 30 days of formation, FM collects the receivables. Two years later, FM sells the inventory contributed by Fenton for $162,500 cash. After three years, FM sells the land for $526,500. FM realized the following income in the current year from these transactions: of $ from collecting cash basis accounts receivable. of $ from sale of inventory. For the land sale, FM recognizes a $ property between themselves and alter the These rule exists to ensure that a partner and partnership inherent character of the underlying deferred income, gain, loss, or deduction