LeBron, Dennis, and Susan formed the Bar T LLC at the beginning of the current year. LeBron and Dennis each contributed $200,000 and Susan transferred several acres of agricultural land she had purchased two years earlier to the LLC. The land had a tax basis of $50,000 and was appraised at $300,000. The land was also encumbered with a $100,000 nonrecourse mortgage (i.e., qualified nonrecourse financing) for which no one was personally liable. The members plan to use the land and cash to begin a cattle-feeding operation. Susan will work full-time operating the business, but LeBron and Dennis will devote less than two days per year to the operation. All three members agree to split profits and losses equally. At the end of the first year, Bar T had accumulated $40,000 of accounts payable jointly guaranteed by LeBron and Dennis and had made a $9,000 principal payment on the mortgage. None of the members have passive income from other sources. For the first year of operations, the partnership records disclosed the following information:
Sales revenue $620,000, Cost of goods sold 380,000, Operating expenses 670,000, Dividends 1,200, Municipal bond interest 300, Salary paid as a guaranteed payment to Susan 10,000 (not included in expenses), Cash distributions split equally among the 3,000 members at year-end
a) Compute the adjusted basis of each member’s interest immediately after the formation of the LLC.