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	$	21,500		$	21,500
Land*		145,500			405,250
Totals	$	167,000		$	426,750

*Nonrecourse debt secured by the land equals $206,000

James, Harold, and Jenny each contributed $220,750 in cash for a 25 percent profits and capital interest.

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

Gain or Loss Recognized

Maude

James

Harold

Jenny

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 the 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	$