John, Ariana and Steve formed JAS LLC (a partnership). John owns 60% of JAS. Ariana and Steve each owns 20%. Their contribution to JAS is as follows: John, Ariana and Steve's share of the income and loss is: 1. What is John's tax basis in the partnership interest (outside basis) in at the end of 2022? 2. What is Ariana's tax basis in the partnership interest (outside basis) in at the end of 2022 ? 3. What is Steve's tax basis in the partnership interest (outside basis) in at the end of 2022? In 2022, John, Arian and Steve are thinking about finding an outside investor to take over. The most valuable property of JAS is the prime location of the land. Which of the following strategy is better in the eyes of a potential investor? In other words, which of the followings will make a prospective investor willing to pay more for JAS? Strategy "Asset Over": In 2022, JAS transfers all if its assets to a newly-formed C-Corporation R. The FMV of the land is $3,000,000. R takes over and assumes all the tax bases from JAS's inside basis. 4. What is R 's tax basis in the assets? 5. When R sells all the assets and liquidates for $5,000,000, what is the realized gain for R ? Strategy "Interest Over" John, Ariana and Steve transfer their interest in JAS to a newly-formed C-Corporation T. The FMV of the land is $3,000,000. T "step into the shoes" of John, Ariana and Steve. T will sell all the assets and then liquidate. 6. What is T's total tax basis in the assets of JAS? 7. When T sells all the assets and liquidates for $5,000,000, what is the realized gain for T? Blank \# 1 Blank \# 2 Blank \# 3 A/ 5. When R sells all the assets and liquidates for $5,000,000, what is the realized gain for R ? Strategy "Interest Over" John, Ariana and Steve transfer their interest in JAS to a newly-formed C-Corporation T. The FMV of the land is $3,000,000. T "step into the shoes" of John, Ariana and Steve. T will sell all the assets and then liquidate. 6. What is T's total tax basis in the assets of JAS? 7. When T sells all the assets and liquidates for $5,000,000, what is the realized gain for T ? Blank \# 1 Blank \# 2 Blank \# 3 Blank \# 4 Blank \# 5 Blank \# 6 Blank \# 7 A A A A A A A