44. Jim has decided to contribute some equipment he previously used in his sole proprietorship in exchange for a 10 percent profits and capital interest in Fast Choppers LLC. Jim originally paid $200,000 cash for the equipment. Since then, the tax basis in the equipment has been reduced to $100,000 because of tax depreciation, and the fair market value of the equipment is now $150,000.

a. Must Jim recognize any of the potential

§1245 recapture when he contributes the machinery to Fast Choppers? [Hint: See

§1245(b)(3).]

b. What cost recovery method will Fast Choppers use to depreciate the machinery?

[Hint: See §168(i)(7).]

c. If Fast Choppers were to immediately sell the equipment Jim contributed for $150,000, how much gain would Jim recognize and what is its character? [Hint: See §1245 and 704(c).]