Required Information[The following Information applies to the questions displayed below.]Rania contributed equipment worth $120,000, purchased 9 months ago for $136,500 cash and usedIn her sole proprietorship, to Sand Creek LLC in exchange for a 35 percent profits and capital InterestIn the LLC. Rania agreed to guarantee all $10,200 of Sand Creek's accounts payable, but she did notguarantee any portion of the $60,000 nonrecourse mortgage securing Sand Creek's office building.Other than the accounts payable and mortgage, Sand Creek does not have any liabilities to othercreditors.a. What is Rania's Initial tax basis in her LLC Interest?Tax basis

Step 1:a)Computation of initial Tax basis as follows : ParticularsAmount($)Explanation…

Answered: Required Information [The following…

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter14: Property Transact Ions: Capital Gains And Losses, § 1231, And Recapture Provisions

Section: Chapter Questions

Problem 86P

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Laurel contributed equipment worth $200,000, purchased 10 months ago for $250,000 cash and used in her sole proprietorship, to Sand Creek LLC in exchange for a 15 percent profits and capital interest in the LLC. Laurel agreed to guarantee all $15,000 of Sand Creek’s accounts payable, but she did not guarantee any portion of the $100,000 nonrecourse mortgage securing Sand Creek’s office building. Other than the accounts payable and mortgage, Sand Creek does not owe any debts to other creditors.a. What is Laurel’s initial tax basis in her LLC interest? b. What is Laurel’s holding period in her interest? c. What is Sand Creek’s initial basis in the contributed property? d. What is Sand Creek’s holding period in the contributed property?
Laurel contributed equipment worth $225,000, purchased 6 months ago for $247,000 cash and used in her sole proprietorship, to Sand Creek LLC in exchange for a 10 percent profits and capital interest in the LLC. Laurel agreed to guarantee all $18,700 of Sand Creek’s accounts payable, but she did not guarantee any portion of the $112,500 nonrecourse mortgage securing Sand Creek’s office building. Other than the accounts payable and mortgage, Sand Creek does not owe any debts to other creditors. a. What is Laurel’s initial tax basis in her LLC interest? Tax basis
Laurel contributed equipment worth $225,000, purchased 6 months ago for $247,000 cash and used in her sole proprietorship, to Sand Creek LLC in exchange for a 10 percent profits and capital interest in the LLC. Laurel agreed to guarantee all $18,700 of Sand Creek’s accounts payable, but she did not guarantee any portion of the $112,500 nonrecourse mortgage securing Sand Creek’s office building. Other than the accounts payable and mortgage, Sand Creek does not owe any debts to other creditors. c. What is Sand Creek’s initial basis in the contributed property? Initial basis
Rania contributed equipment worth $195,000, purchased 9 months ago for $228,000 cash and used in her sole proprietorship, to Sand Creek LLC in exchange for a 20 percent profits and capital interest in the LLC. Rania agreed to guarantee all $18,500 of Sand Creek's accounts payable, but she did not guarantee any portion of the $97,500 nonrecourse mortgage securing Sand Creek's office building. Other than the accounts payable and mortgage, Sand Creek does not have any liabilities to other creditors. a. What is Rania's initial tax basis in her LLC interest?
Laurel contributed equipment worth $120,000, purchased 9 months ago for $136,500 cash and used in her sole proprietorship, to Sand Creek LLC in exchange for a 35 percent profits and capital interest in the LLC. Laurel agreed to guarantee all $10,200 of Sand Creek’s accounts payable, but she did not guarantee any portion of the $60,000 nonrecourse mortgage securing Sand Creek’s office building. Other than the accounts payable and mortgage, Sand Creek does not owe any debts to other creditors. a. What is Laurel’s initial tax basis in her LLC interest? b. Laurel’s holding period begins the day the LLC interest is acquired. True or False. c. What is Sand Creek’s initial basis in the contributed property? d.What is Sand Creek’s holding period in the contributed property?
Dave LaCroix recently received a 10 percent capital and profits interest in Cirque Capital LLC in exchange for consulting services he provided. If Cirque Capital had paid an outsider to provide the advice, it would have deducted the payment as compensation expense. Cirque Capital's balance sheet on the day Dave received his capital interest appears below: Assets: Cash Investments Land Totals Liabilities and capital: Nonrecourse liabilities Lance" Robert Totals Basis $ 130,000 180,000 210,000 $ 520,000 Tax basis $ 190,000 165,000 165,000 $ 520,000 Dave Fair Market Value *Assume that Lance's basis and Robert's basis in their LLC interests equal their tax basis capital accounts plus their respective shares of nonrecourse liabilities. (Leave no answer blank. Enter zero if applicable.) Lance a. Compute and characterize any gain or loss Dave may have to recognize as a result of his admission to Cirque Capital. Gain or loss recognized as Ordinary income $ 130,000 207,000 320,000 $ 657,000 b.…
Dave LaCroix recently received a 10 percent capital and profits interest in Cirque Capital LLC in exchange for consulting services he provided. If Cirque Capital had paid an outsider to provide the advice, it would have deducted the payment as compensation expense. Cirque Capital's balance sheet on the day Dave received his capital interest appears below: Assets: Cash Investments Land Totals $ 480,000 Liabilities and capital: Nonrecourse liabilities Tatsuki* Robert* Totals "Assume that Tatsuki's basis and Robert's basis in their LLC interests equal their tax basis capital accounts plus their respective shares of nonrecourse liabilities. Note: Leave no answer blank. Enter zero if applicable. $ 120,000 180,000 180,000 Basis $ 120,000 110,000 250,000 Fair Market Value $ 120,000 140,000 380,000 $ 640,000 $ 120,000 260,000 260,000 $ 480,000 $ 640,000 e. Compute each member's tax basis in his LLC interest immediately after Dave's receipt of his interest if Dave receives only a profits…
Dave LaCroix recently received a 10 percent capital and profits interest in Cirque Capital LLC in exchange for consulting services he provided. If Cirque Capital had paid an outsider to provide the advice, it would have deducted the payment as compensation expense. Cirque Capital's balance sheet on the day Dave received his capital interest appears below: Assets: Cash Investments Land Totals Liabilities and capital: Nonrecourse liabilities Tatsuki* Robert* Totals Assets: Cash Investments Land Totals Capital: Nonrecourse Debt Capital-Tatsuki Capital-Robert Capital-Dave Totals $ Basis *Assume that Tatsuki's basis and Robert's basis in their LLC interests equal their tax basis capital accounts plus their respective shares of nonrecourse liabilities. Note: Leave no answer blank. Enter zero if applicable. $ $ 150,000 200,000 150,000 $ 500,000 c. Prepare a balance sheet for Cirque Capital immediately after Dave's admission showing the members' tax capital accounts and their capital accounts…
Margaret Lindley paid $15,050 of interest on her $300,500 acquisition debt for her home (fair market value of $500,500), $4,050 of interest on her $30,050 home-equity debt used to buy a new boat and car, $1,050 of credit card interest, and $3,050 of margin interest for the purchase of stock (investment interest). Assume that Margaret Lindley has $10,050 of interest income this year and no other investment income or expenses. How much of the interest expense may she deduct this year? Multiple Choice $22,150 $23.200 None of the choices are correct $10:300 Multiple Choice $22,150 $23,200 None of the choices are correct. $19,100 $18.300 D 6:06 am ✓ 6:07 am ✓
Margaret Lindley paid $15,190 of interest on her $301,900 acquisition debt for her home (fair market value of $501,900), $4,190 of interest on her $30,190 home-equity debt used to buy a new boat and car, $1,190 of credit card interest, and $3,190 of margin interest for the purchase of stock. Assume that Margaret Lindley has $10,190 of interest income this year and no investment expenses. How much of the interest expense may she deduct this year? $23,760 $22,570 $19,380 $18,380 None of the choices are correct.
Dave LaCroix recently received a 10 percent capital and profits interest in Cirque Capital LLC in exchange for consulting services he provided. If Cirque Capital had paid an outsider to provide the advice, it would have deducted the payment as compensation expense. Cirque Capital's balance sheet on the day Dave received his capital interest appears below: Assets: Cash Investments Land Totals Liabilities and capital: Nonrecourse liabilities Tatsuki* Robert* Totals Tax basis $ Dave Basis 21,000 $ 180,000 130,000 230,000 $ 540,000 Answer is not complete. Tatsuki Robert $ 210,000 165,000 165,000 $ 540,000 *Assume that Tatsuki's basis and Robert's basis in their LLC interests equal their tax basis capital accounts plus their respective shares of nonrecourse liabilities. Note: Leave no answer blank. Enter zero if applicable. Fair Market Value e. Compute each member's tax basis in his LLC interest immediately after Dave's receipt of his interest if Dave receives only a profits interest. $…
Betty contributed to Alpha Beta Corporation a building with an adjusted basis to Betty of $50,000 and a fair market value of $150,000 that was subject to a mortgage of $120,000 in exchange for 50 percent of the voting common stock (the only class of stock) of the Alpha Beta Corporation. The Alpha Beta Corporation will assume the mortgage on the building. As part of the same transaction, Alfie contributed to Alpha Beta Corporation cash of $30,000 in exchange for the other 50 percent of the voting common stock of Alpha Beta Corporation. How much gain or loss, if any, does Betty recognize with respect to this transaction? a. $0. b. $10,000. c. $70,000. d. $100,000.

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