Trace the basis that Toby should assign to the land and building.

It is now early in 2018, and Peachtree has become very successful. Various of the entitys properties have been turned over several times, and most transactions have been profitable. Within the last year or so, there has been a complete turnover of all of Peachtrees properties, with all proceeds being reinvested elsewhere.

Toby now wants to withdraw from Peachtree. Under the terms of the original LLC agreement, the other two members may buy Toby out with cash, or they may identify and distribute to him LLC assets equal to the fair market value of Tobys interest. The Peachtree balance sheet at the end of 2017 was as follows.

ASSETS TAX BASIS FMV

CASH 260,000 260,000

Investament Land - BROWN 175,000 225,000

Investament Land - BLUE 290,000 240,000

Office Building - Violet 300,000 300,000

Office Building - Aqua 175,000 175,000

1,200,000 1,200,000

Each member still holds a 1/3 interest, and inside basis equals outside basis for all Peachtree holdings, because of the recent asset turnover.

After reviewing the assets, the members decide to distribute Investment Land -- Brown and Office Building -- Aqua in liquidation of Tobys interest.

Trace the basis that Toby should assign to the land and building.