Kenisha and Shawna form the equal KS LLC with a cash contribution of $360,000 from Kenisha and a property contribution (adjusted basis of $380,000, fair market value of $360,000) from Shawna.

a. How much gain or loss, if any, does Shawna realize on the transfer? Does Shawna recognize any gain or loss? If so, how much?

b. What is Kenisha's basis in her LLC interest?

c. What is Shawna's basis in her LLC interest?

d. What basis does the LLC take in the property transferred by Shawna?

e. Are there more effective ways to structure the formation? Explain.

Question

Business

Amelia Wheeler

9 April, 17:12

Kenisha and Shawna form the equal KS LLC with a cash contribution of $360,000 from Kenisha and a property contribution (adjusted basis of $380,000, fair market value of $360,000) from Shawna.

a. How much gain or loss, if any, does Shawna realize on the transfer? Does Shawna recognize any gain or loss? If so, how much?

b. What is Kenisha's basis in her LLC interest?

c. What is Shawna's basis in her LLC interest?

d. What basis does the LLC take in the property transferred by Shawna?

e. Are there more effective ways to structure the formation? Explain.

+4

Answers (1)

Know the Answer?

Brody Nichols · Answer 1

Answer and Explanation:

. a.

Shawna would not recognize any gain or loss because the partners contributed property to the partnership.

b. Kenisha's basis in her LLC interest would be $360,000

c. Shawna would have basis of $380,000 in her LLC interest.

d. $380,000 of the property contribution is taken as a basis of Shawna in the property of LLC.

e. The more effective way to structure the formation would be for Shawna to sell her land for the fair market value of $360,000 and contribute the money to the LLC. Therefore according to the LLC there is the same amount of basis for both Shawna and Kenisha. 37