Scott and Isabella are equal partners in SI, LLC formed on June 1 of the current year. Scott contributed land with a basis to Scott of $90,000 and Equipment with a basis to Scott of $20,000. On the date of contribution, the fair market value of the land was $185,000 and the fair market value of the equipment was $15,000.

Isabella has significant experience developing real estate. After the LLC is formed she will prepare a plan for developing the property and secure zoning approvals for the LLC. Isabella would normally bill a third party $90,000 for these efforts. Isabella also will contribute $110,000 of cash in exchange for her 50% interest in the LLC. Scott and Isabella agree that the value of Isabellas 50% interest is $200,00

1. (5 Points). How much gain or loss in total will SI, LLC recognize upon the receipt of the contributions from both of its partners?

2. (5 Points). How much gain or income will Scott recognize on his contributions of the land and equipment to the LLC? What is the character of any gain or income recognized?

3. (5 Points). What basis will Scott take in his LLC interest?

4. (5 Points). How much gain or income will Isabella recognize on the formation of the LLC? What is the character of any gain or income recognized by Isabella?

5. (5 Points). What basis will Isabella take in her LLC interest?