1. T contributed $100,000 to a real estate LLC in exchange for a 10% interest in capital, and profits and losses. The partnership borrowed $4,000,000 on a nonrecourse loan and purchased rental properties for $4,500,000. The LLC generated $2,500,000 in losses and its nonrecourse mortgage was reduced to $3,500,000. After the above events, what would be the tax consequences to T of the following:
a. He sold his interest for $10,000.
b. A new investor became a member of the LLC and as a result, T's interests were reduced from 10% to 5%. The new investor's contributed capital was used to reduce the mortgage to $2,000,000.