Three individuals, C, D, and E, form CDE LLC. CDE LLC does not check the box to become a corporation and therefore is treated as a partnership for tax purposes.

(a) C contributes land, adjusted basis $70 fair market value $100 and cash of $20. D contributes inventory (in the hands of both D and CDE), adjusted basis $50 fair market value $120. E contributes services. In exchange, each partner receives a 1/3 interest in the LLC. What are the consequences to all of the parties?

(b) Same as (a) except that Cs land is subject to an assumable mortgage of 30 and has a fair market value of 130.