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 $245,000 $245,000 Accounts receivable Inventory 0 441,000 122,500 306,250 From Myers: Land 1,042,250 992,250 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 $306,250 cash. After three years, FM sells the land for $992,250. FM realized the following income in the current year from these transactions: of $ of s from collecting cash basis accounts receivable. from sale of inventory. For the land sale, FM recognizes a s These rules exist to ensure that a partner and partnership ( property between themselves and alter the inherent character of the underlying deferred income, gain, loss, or deduction.