When High Horizon LLC was formed, Maude contributed the following assets in exchange for a 25 percent capital and profits interest in the LLC:

	Basis	Fair Market Value
Maude:
Cash	$ 34,750	$ 34,750
Land*	106,500	400,750
Totals	$ 141,250	$ 435,500

*Nonrecourse liability secured by the land equals $169,000

James, Harold, and Jenny each contributed $266,500 in cash for a 25 percent profits and capital interest

a. How much gain or loss will Maude and the other members recognize?

	Maude	James	Harold	Jenny
Gain or loss recognized

b. What is Maudes tax basis in her LLC interest?

c. What tax basis do James, Harold, and Jenny have in their LLC interests?

	James	Harold	Jenny
Tax basis

d. What is High Horizons tax basis in its assets?

e. Prepare a tax basis balance sheet for High Horizon LLC showing the tax capital accounts for the members.

High Horizons, LLC
Tax Basis Balance Sheet
	Tax Basis
Assets:
Cash
Land
Totals
Liabilities and capital:
Mortgage debt
Capital-Maude
Capital-James
Capital-Harold
Capital-Jenny
Totals