This year, Carrie and Ned formed CN LLC. Carrie contributed $300,000 of cash, and Ned contributed real estate valued at $450,000 (basis of $200,000). The property was subject to a recourse liability of $150,000 that was assumed by the LLC, but which is not guaranteed by either LLC member. Carrie and Neds profit sharing ratios are 40%/60%, respectively, but the loss sharing ratios are 50%/50%.

a. Is the debt treated as a recourse debt or a nonrecourse debt to the LLC members?

b. How is the debt allocated between Carrie and Ned?

c. What are Neds and Carries bases in the LLC interest immediately after the LLC was formed? Show your calculations.