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 $145,000 $145,000 Accounts receivable 0 261,000 Inventory 72,500 181,250 From Myers: Land 637,250 587,250 FM originally intended to hold the inventory as investment property. Myers held the land as long-term investment property, but 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 $181, After three years, FM sells the land for $587,250. FM realized the following income in the current year from these transactions: Ordinary income of $ Ordinary income of $ from collecting cash basis accounts receivable. from sale of inventory. For the land sale, FM recognizes a $ capital loss These rule exists to ensure that a partner and partnership cannot transfer character of the underlying deferred income, gain, loss, or deduction. property between themselves and alter the