The JM Partnership was formed to acquire land and subdivide it as residential housing lots. On March 1, 2019, Jessica contributed land valued at $630,000 to the partnership in exchange for a 50% interest. She had purchased the land in 2011 for $441,000 and held it for investment purposes (capital asset).

Liam & Reagan Company is a partnership that has two partners, Liam and Reagan. At the beginning of the year, Liam's basis in the partnership is $40,000 while Reagan's basis is $70,000. During the year, Liam transfers a building to the partnership. The building has an adjusted basis to Liam of $350,000 and a fair market value of $450,000. There is a recourse mortgage attached to the building of $250,000 that the partnership assumes. Liam's profit-sharing ratio is 40% and his loss sharing ratio is 30%. Reagan's profit-sharing ratio is 60% and her loss sharing ratio is 70%. What is Reagan's basis after this transaction?

Marcus and Madison are equal members of an LLC. On January 1 of the current year, to acquire a one-third interest in the entity, Nora contributed a parcel of land she had held for investment. (At this time, the entity will be renamed MMN LLC.) Nora had purchased the land for $120,000; its fair market value was $90,000 at the contribution date. A few years later, the LLC sells Nora’s land for $84,000. At the beginning of that year, Nora’s capital account (determined using the tax basis) was $200,000 and Marcus and Madison’s capital accounts (also calculated on the tax basis) were $170,000. a. What is the LLC’s recognized gain or loss? How is it allocated among the LLC members? b. Use Microsoft Excel to prepare schedules that compute the partners’ tax basis capital accounts immediately after the sale. Use variables to input the amount allocated to each LLC member and the total not specially allocated.

Tom and Rick plan to form T & S Investments, a general partnership, to remodel and operate a small shopping mall in a building that is owned by Rick. They have agreed that Tom will contribute $50,000 cash for a 50% interest. For the other 50% interest, Rick intends to contribute the building and land, which has a FMV of $180,000 (building $150,000 and land $30,000) and is subject to a fully recourse mortgage liability of $130,000 incurred to purchase the building. Rick's depreciated basis in the building is $46,400 and accumulated depreciation prior to the building's contribution is $63,600. The building and land were purchased on June 5, 1995 for $123,600 (building $110,000 and land $13,600). Will Rick's contribution of property subject to a liability exceeding the basis of the property qualify for non-recognition treatment? What is the partnership's basis in the property? What is Rick's basis in his partnership interest? What is Tom's basis in his partnership interest?