34. O.3 - Determine the tax effects of forming a partnership with cash and property contributions., 17 - Identify tax planning opportunities related to partnerships and their partners. Continue with the facts presented in Problem 33.

    1. Use Microsoft Excel to construct a balance sheet for SD LLC assuming that Drews services are completed immediately after forming SD. The balance sheet should show two numeric columns, including the LLCs basis in the assets and the fair market value of these assets.

    2. Outline any planning opportunities that may minimize current taxation to any of the parties.

35. LO.3 - Determine the tax effects of forming a partnership with cash and property contributions., 17 - Identify tax planning opportunities related to partnerships and their partners. Continue with the facts presented in Problem 33. At the end of the first year, the LLC distributes $100,000 of cash to Sam. No distribution is made to Drew. Assume there were no other income or loss transactions for the year that would affect Sams basis in his LLC interest.

    1. Under general tax rules, how would the payment to Sam be treated?

    2. Under general tax rules, how much income or gain would Sam recognize as a result of the contribution and distribution?

    3. Under general tax rules, what basis would the LLC take in the land Sam contributed?

    4. d. What alternative treatment might the IRS try to impose?

    5. Under the alternative treatment, how much income or gain would Sam recognize?

    6. Under the alternative treatment, what basis would the LLC take in the land contributed by Sam?