Partnership(taxation)

Assume that all partnership interests expressed as percentages are those percentages of both profits/losses and capital. Assume that all liabilities are recourse.

a) Three individuals, C, D, and E, form CDE LLC. CDE LLC does not check the box to become a corporation and therefore is treated as a partnership for tax purposes. C contributes land, AB 70 FMV 100 and cash of 20. D contributes inventory (in the hands of both D and CDE), AB 50 FMV 120. E contributes services. In exchange, each partner receives a 1/3 interest in the LLC. What are the consequences to all of the parties?

(b) Same as (a) except that Cs land is subject to an assumable mortgage of 30 and has a FMV of 130