Questions:

1.What is the amount and character of Wesley's recognized gain or loss?

2. If the LLC has a 754 election in place, what is the amount of the special basis adjustment and what effect does it have on the partnership books - assuming they are kept on the tax basis?

Research Memo Bud, Lawson, and Wesley Ford each own an interest in Ford Brothers LLC. Their respective interests are listed below and the basis of each of their interests is shown. Wesley is exiting as an owner and receives a distribution of $15,000 cash from the LLC in complete liquidation of his interest. The company has the followin balance sheet: Assets: Tax Basis FMV Cash $ 26,200 $ 26,200 Stock (investment) 7,300 9,200 Land 66,000 39,600 Totals $ 99.500 $ 75.000 Liabilities and capital: Capital - Bud - 40% - Lawson - 40% - Wesley - 20% Totals 39,800 39,800 19,900 $ 99,500 Research Memo Bud, Lawson, and Wesley Ford each own an interest in Ford Brothers LLC. Their respective interests are listed below and the basis of each of their interests is shown. Wesley is exiting as an owner and receives a distribution of $15,000 cash from the LLC in complete liquidation of his interest. The company has the followin balance sheet: Assets: Tax Basis FMV Cash $ 26,200 $ 26,200 Stock (investment) 7,300 9,200 Land 66,000 39,600 Totals $ 99.500 $ 75.000 Liabilities and capital: Capital - Bud - 40% - Lawson - 40% - Wesley - 20% Totals 39,800 39,800 19,900 $ 99,500