Ask Question
BusinessBusiness
30 April, 22:47

Lance contributed investment property worth $650,000, purchased Four years ago for $350,000 cash, to Cloud Peak LLC in exchange for an 75 percent profits and capital interest in the LLC. Cloud Peak owes $302,500 to its suppliers but has no other debts.

a. What is Lance's tax basis in his LLC interest?

b. What is Lance's holding period in his interest?

c. What is Cloud Peak's basis in the contributed property?

d. What is Cloud Peak's holding period in the contributed property?

+1
Answers (1)
  1. 30 April, 23:15
    0
    a. Tax basis $ 576,875

    b. Four years

    c. $350,000

    d. Four years

    Explanation:

    a. Tax basis $ 576,875

    ($350,000+$226,875)

    Lance's basis in his LLC interest is made up of the $350,000 basis of the investment property he transferred to the LLC and his $226,875 share of the LLC debt is ($302,500 x 75%) due to the fact that LLC general debt obligations are treated as non recourse debt which is why Lance's profit sharing ratio is used to allocate a portion of the LLC debt to him.

    b. Lance's Holding period in his interest is four years in which Lance had been holding investment property.

    c. Basis $350,000

    d. Cloud Peak's holding period in the contributed property is four years
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Lance contributed investment property worth $650,000, purchased Four years ago for $350,000 cash, to Cloud Peak LLC in exchange for an 75 ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
Why should an auditor make decisions in the public interest rather than in the interest of management or current shareholders?
Answers (1)
Chae Corporation uses the weighted-average method in its process costing system. This month, the beginning inventory in the first processing department consisted of 600 units.
Answers (1)
Bronson Manufacturing is planning to issue $12 million in bonds. Based on a poll of potential investors, they have the highest chance of raising the funds they need with one of four sets of bond characteristics.
Answers (1)
Match each of the following contract principles to the statement that best fits it: A. bargained-for exchange of value to the parties B. the subject matter of the contract does not violate law or public policy C.
Answers (1)
A builder must build fifty houses by the end of the year but he has run out of available land. Which best describes the builder's supply of houses?
Answers (2)
New Questions in Business
JRN Enterprises just announced that it plans to cut its dividend from $3.50 to $2.50 per share and use the extra funds to expand its operations.
Answers (1)
Sykora, Inc., which uses a predetermined overhead rate based on direct labor hours, estimated total overhead for the year to be $12,000,000 and total direct labor hours to be 320,000 hours. Calculate Sykora's predetermined overhead rate.
Answers (1)
Appalachian mountain goods has paid increasing dividends of $.10, $.12, $.15, and $.20 a share over the past four years, respectively.
Answers (1)
What type of skills tends to be equally important at all levels of management? a. technical skills b. human skills c. decisional skills d. motivation to manage e. conceptual skills
Answers (1)
Faldo Corp sells on terms that allow customers 45 days to pay for merchandise. Its sales last year were $325,000, and its year-end receivables were $60,000. If its DSO is less than the 45-day credit period, then customers are paying on time.
Answers (1)
Home » Business » Lance contributed investment property worth $650,000, purchased Four years ago for $350,000 cash, to Cloud Peak LLC in exchange for an 75 percent profits and capital interest in the LLC.
Sign Up Forgot Password?