On January $2$ of the current year, Fenton and Myers form the FM LLC$.$ Their contributions to the LLC are as follows.

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 $$87,500$ cash.

After three years, FM sells the land for $$283,500.$

FM realized the following income in the current year from these transactions:

from collecting cash basis accounts receivable.

For the land sale, FM recognizes a $

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.