Question - Suzy contributed assets valued at $360,000 (basis of $200,000) in exchange for her 40% interest in the Suz-Anna LLC. Anna contributed land and a building valued at $640,000 (basis of $380,000) in exchange for the remaining 60% interest. Anna's property was encumbered by a qualified nonrecourse debt of $100,000, which was assumed by the LLC. The LLC reports the following income and expense sfor the current tax year:
Sales $560,000
Utilities, salaries, and other operating expenses $360,000
Short -term capital gain10,000
Tax-exempt interest income 4,000
Charitable contributions 8,000
Distributions to Suzy 10,000
Distribution to Anna 20,000
During the current tax year, Suz-Anna refinanced the land and building. At the end of the year, Suz Anna had recourse debt of $100,000 for LLC accounts payable and qualified non-recourse debt of $200,000.
Remember Suz-Anna was fkrmed as an LLC
Requirements:
A. How would Suz-Anna's ending liabilities be treated?
B. How would Suzy's basis and amount at risk be different?