Please answer all of number 2 problem with Drita, Ethel, and Frank. Be sure to show your work (and support your answer-interenet, IRS, tax law etc.)
What is you (c) Claire (1) What is the amount of gain or loss realized by Claire upon her contribution cash to the partnership? (2) What is the amount of gain or loss recognized by Claire? Why? 2. Drita, Ethel, and Frank formed a limited liability company in which they were equ members. They contributed the following assets: Drita: Asset Cash Ethel: Asset Accounts receivable al Fair Market Value $5,000 Adjusted Basis $5,000 Adjusted Basis $-0- 700 Fair Market Value $4,000 1,000 Installment note (from the sale of inventory) Frank: Asset Land Fair Market Value $5,000 Adiusted Basis $9,000 Frank held the land for investment and had purchased it six years prior to contribution. (a) How is a limited liability company treated for tax purposes? Hint: See Treas. Reg. S301.7701-3(a), (b)(1) (b) Drita: (1) What is the amount of gain or loss realized by Drita upon her contribution of cash to the limited liability company? (2) What is the amount of gain or loss recognized by Drita? Why? (c) Ethel: (1) What is the amount of gain or loss realized by Ethel upon her contribution of accounts receivable and installment note to the limited liability company? (2) What is the amount of gain or loss recognized by Ethel on each asset? Why? What the is your authority? (d) Frank: (1) What is the amount of gain or loss realized by Frank upon his contribution of the land to the limited liability company? What is you (c) Claire (1) What is the amount of gain or loss realized by Claire upon her contribution cash to the partnership? (2) What is the amount of gain or loss recognized by Claire? Why? 2. Drita, Ethel, and Frank formed a limited liability company in which they were equ members. They contributed the following assets: Drita: Asset Cash Ethel: Asset Accounts receivable al Fair Market Value $5,000 Adjusted Basis $5,000 Adjusted Basis $-0- 700 Fair Market Value $4,000 1,000 Installment note (from the sale of inventory) Frank: Asset Land Fair Market Value $5,000 Adiusted Basis $9,000 Frank held the land for investment and had purchased it six years prior to contribution. (a) How is a limited liability company treated for tax purposes? Hint: See Treas. Reg. S301.7701-3(a), (b)(1) (b) Drita: (1) What is the amount of gain or loss realized by Drita upon her contribution of cash to the limited liability company? (2) What is the amount of gain or loss recognized by Drita? Why? (c) Ethel: (1) What is the amount of gain or loss realized by Ethel upon her contribution of accounts receivable and installment note to the limited liability company? (2) What is the amount of gain or loss recognized by Ethel on each asset? Why? What the is your authority? (d) Frank: (1) What is the amount of gain or loss realized by Frank upon his contribution of the land to the limited liability company
