Exercise 21-18 (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 $152,500 $152,500 Accounts receivable 0 274,500 Inventory 76,250 190,625 From Myers: Land 667,625 617,625 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 $190,625 cash. After three years, FM sells the land for $617,625. FM realized the following income in the current year from these transactions: . Ordinary income of $ from collecting cash basis accounts receivable. . Ordinary income of $ 114,375 from sale of inventory. For the land sale, FM recognizes a $ capital loss property between themselves and alter the inherent These rule exists to ensure that a partner and partnership cannot transfer character of the underlying deferred income, gain, loss, or deduction