Susan and Mary decide to go into business together. After much discussion they decided to organize their business as a Limited Liability Company. For tax purposes Susan and Mary chose to have their LLC taxed as a partrnership. Susan and Mary formed the SM LLC on January 16, 2016. They agreed to split proits and losses equally. Susan contributed $40,000 cash and Mary contributed section 1231 property a machine with a basis of $10,000 and a fair market value of $100,000 subject to a debt of $60,000 and January 17, 2016. Mary's holding period for the machine beganon April 2, 2014.

a) Mary's recognized gain is? Why?

b) Susan's recognized gain is? Why?

c) The SM LLC's net recognized gain is? Why?

d) Mary's basis for her interest is? Why?

e) Susan's basis for her interest is? Why?

f) The SM LLC's basis for the property contributed by Mary is? Why?

g) When does SM LLC's holding period begin for the property contributed by Mary? Why? Cite code section.