42. 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 $ 20,000 $ 20,000 Land* 100,000 360,000 Totals $120,000 $380,000

*Nonrecourse debt secured by the land equals

$160,000.

James, Harold, and Jenny each contributed

$220,000 in cash for a 25 percent profits and capital interest.

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

b. What is Maude’s tax basis in her LLC interest?

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

d. What is High Horizon’s tax basis in its assets?

e. Following the format in Exhibit 20-2, prepare a tax basis balance sheet for High Horizon LLC showing the tax capital accounts for the members.