Question description<\/p>\n
On January 1, 2002, John, Mary and Susan decided to organize
\nan LLC (taxed, for federal tax purposes, as a partnership). John contributed $
\n100,000 in cash in exchange for a 25% interest in the LLC. Mary contributed $
\n50,000 in cash and accounts receivables with a basis of 0$ and a fair market
\nvalue of $ 50,000 in exchange for a 25% interest in the LLC. Susan contributed
\n$100,000 in cash and a capital asset having a basis of $60,000 and a fair
\nmarket value of $100,000 in exchange for a 50% interest in the LLC.
\nThe LLC had income from operations of $80,000 during the 2002
\ntax year. However, no distributions were made to John, Mary or Susan during
\n2012. The LLC had a loss from operations of $40,000 during the 2003 tax year.
\nAgain, no distributions were made during 2003. During 2003, the LLC acquired a
\nbuilding for $ 100,000 paying $40,000 in cash and obtaining a non-recourse loan
\nto finance the remaining purchase price ($60,000) (the \u201cBuilding Loan\u201d). The
\nlender for the Building Loan secured its loan with a mortgage on the building.
\nOn January, 1, 2004, the LLC paid off the Building Loan and
\nthe mortgage on the building was released. On January 2, 2004, John sold his
\ninterest in the LLC to Therese for $110,000. At the time of the purchase and
\nsale of John\u2019s interests, the LLC had a valid IRC Code Section 754 election in
\nPlace with the IRS. The LLC has income from operations of $160,000 during the
\n2004 tax year. Again, no distributions were made to Mary, Susan or Therese
\nduring the 2004 tax year.
\nOn January 1, 2005, the LLC sold the accounts receivables
\nfor $50,000 in cash and the building for $120,000 to separate third parties and
\ndissolved. Upon the dissolution, the LLC distributed the capital asset to Mary.
\nAll other liquidation distributions are made in cash payments to the LLC
\nmembers in accordance with the LLC\u2019s operating agreement, which contains the
\nfollowing provisions:
\n1.\u00a0
\nCapital accounts. The LLC will maintain capital
\naccounts pursuant to the provisions of Treas. Reg. \u00a7 1.704-1 (b) (2) (iv), as required by
\nTreas. Reg. \u00a0\u00a7
\n1.704-1(b)(2)(ii)(b)(1).
\n2.\u00a0
\nLiquidation. Upon liquidation of the LLC,
\nliquidating distributions will be made according to the positive capital
\naccount balances of the members, as determined after taking into account all
\ncapital account adjustments for the LLC taxable year during which such
\nliquidation occurs, by (i) the end of such taxable year, or (ii) within 90 days
\nafter the date of such liquidation.
\n3.\u00a0
\nAdditional Capital Contributions Required. Each
\nmember shall be obligated to make up any deficit account balance existing at
\nthe end of any year or upon liquidation of the LLC.
\nAssume that (i) no cash distributions were made to any
\nmember, except as provided herein, (ii) all income and loss generated during
\nthe years of operation resulted from cash transactions, (iii) no depreciation
\noccurred on the capital asset for any year and the fair market value of the
\nasset remained the same at all times, and (iv) the agreement among the members
\nof the LLC also include language that all allocation of income and loss were to
\nbe in accordance with the respective interests of the LLC members.
\nDiscuss, in detail, the implications to all parties
\n(inclusive of the LLC) of each transaction identified above, including the
\nimpact on each member\u2019s basis in his LLC interest and his capital account at
\nthe end of each year.
\nN\/B: Give at least 10 page analysis.<\/p>\n","protected":false},"excerpt":{"rendered":"
Question description On January 1, 2002, John, Mary and Susan decided to organize an LLC (taxed, for federal tax purposes, as a partnership). John contributed $ 100,000 in cash in exchange for a 25% interest in the LLC. Mary contributed $ 50,000 in cash and accounts receivables with a basis of 0$ and a fair […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,6515,8569,8567,8568,8570],"tags":[5882,6803,4009,7294,7293],"class_list":["post-47723","post","type-post","status-publish","format-standard","hentry","category-dissertation-writing","category-essay-writing","category-homework-assistance","category-online-assignment-help","category-paper-writing-services","category-write-my-essay-2","tag-best-essays-uk","tag-dissertation-topic-help","tag-do-my-essay-assignment-in-ireland","tag-essay-for-sale-australia","tag-help-with-writing-an-essay"],"_links":{"self":[{"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/posts\/47723","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/comments?post=47723"}],"version-history":[{"count":0,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/posts\/47723\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/media?parent=47723"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/categories?post=47723"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.colapapers.com\/us\/wp-json\/wp\/v2\/tags?post=47723"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}