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phoebe and parker are equal members in phoenix investors llc they are real estate in 709483

Phoebe and Parker are equal members in Phoenix Investors, LLC. They are real estate investors who formed the LLC several years ago with equal cash contributions. Phoenix then purchased a piece of land. On January 1 of the current year, to acquire a one third interest in the entity, Reece contributed to the LLC some land she had held for investment. Reece purchased the land five years ago for $75,000; its fair market value at the contribution date was $90,000. No special allocation agreements were in effect before or after Reece was admitted to the LLC. Phoenix holds all land for investment. Immediately before Reece’s property contribution, the balance sheet of Phoenix Investors, LLC, was as follows:

Basis

FMV

Basis

FMV

Land

$30,000

$180,000

Phoebe, capital

$15,000

$ 90,000

$30,000

$180,000

Parker, capital

15,000

90,000

$30,000

$180,000

a. At the contribution date, what is Reece’s basis in her interest in the LLC?

b. When does the LLC’s holding period begin for the contributed land?

c. On June 30 of the current year, the LLC sold the land contributed by Reece for $90,000. How much is the recognized gain or loss? How is it allocated among the LLC members?

d. Prepare a balance sheet reflecting basis and fair market value for the LLC immediately after the land sale described in (c). Assume that no other transactions occurred during the year.

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