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 $200,000.

1. What basis will Scott take in his LLC interest?
2. How much gain or income will Isabella recognize on the formation of the LLC?
3. What basis will Isabella take in her LLC interest?