Percent profits and capital interest jing contributes

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percent profits and capital interest. Jing contributes $60,000 in cash for a 25 percent profits and capital interest. The LLC does not have any debt (either from the partners or that it takes on directly from a bank). a. ( 4 points for each partner’s full answer ) Do any of the partners have to recognize a taxable gain (or loss) on the transactions above? If so, how much gain (loss) for each partner? b. ( 4 points for each partner ) What is each partner’s initial outside tax basis in his or her LLC interest? c. ( 4 points for each asset ) What is the LLC’s tax basis in the property received (the van, shop, and cash)? d. ( 4 points ) Prepare a balance sheet using the tax basis method (as opposed to FMV method) from the above transactions. e. Say the scenario is the same as the set-up for this question except that the van Chen owned and contributed had a $10,000 car loan on it that used the van as collateral (where the creditor could not come after Chen or any of the other partners beyond the collateral or profits in the business). i. ( 4 points ) What kind of debt is this, recourse or non-recourse debt? ii. ( 4 points for each partner ) What are Chen, Bo, and Jing’s outside tax basis in the LLC in this updated setting? 1
2. Tammy, Rebecca, and Miriam are partners in TRM Consulting, LLC, which will receive partnership tax treatment as the default for tax purposes. Tammy, Rebecca, and Miriam contribution $50,000, $25,000, and $25,000 of cash. In addition, the partnership agreed to take on a non-recourse loan of $20,000 from Miriam. Rebecca would like to contribute services to the partnership and is considering asking for additional profits interest in return for the service. Without the service, Tammy, Rebecca, and Miriam’s profits interests would

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