Phoebe and Parker are equal members of Phoenix Investors, LLC. They are real estate investors who formed the LLC several years ago with equal cash contributions. Phoenix then purchased a parcel of land. Phoenix holds all land for investment.

On January 1 of the current year, to acquire a one-third interest in the entity, Reece contributed to the LLC some land she had held for investment. Reece purchased the land five years ago for $120,000; its fair market value at the contribution date was $90,000. No special allocation agreements were in effect before or after Reece was admitted to the LLC. A few years later, Phoenix sold the land contributed by Reece for $84,000.

Immediately before Reece's property contribution, the balance sheet of Phoenix Investors, LLC, was as follows:

	Basis			FMV			Basis			FMV
Land	$30,000			$180,000		Phoebe, capital	$15,000			$90,000
						Parker, capital	15,000			90,000
	$30,000			$180,000		Total	$30,000			$180,000

a. Regarding the land sale, how much is recognized and how is it allocated?

On the land sale, under 704(c), $ __________of unrealized gain or loss at the contribution date on property contributed for an LLC interest is allocated to __________________.

b. Prepare the schedule that shows the computation of the basis of each LLC member's capital account immediately after the sale.

If an amount is none, enter "0".

		Total	Phoebe	Parker	Reece
Balance before sale		$	$	$	$
Less: Built-in loss on land
Less: Loss on land after
	contribution date
Balance after sale		$	$	$	$

Prepare the schedule that shows the computation of the fair market value of each LLC member's capital account.

		Total	Phoebe	Parker	Reece
Before sale		$	$	$	$
Less: Loss on land after
	contribution date
Balance after sale		$	$	$	$

c. Complete the balance sheet reflecting basis and fair market value for the LLC immediately after the land sale.

	Basis	FMV		Basis	FMV
Cash	$	$	Interest, Phoebe	$	$
Land			Interest, Parker
			Interest, Reece
	$	$		$	$