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Alenkasestr [34]
3 years ago
15

Lance contributed investment property worth $640,000, purchased three years ago for $245,000 cash, to Cloud Peak LLC in exchange

for an 75 percent profits and capital interest in the LLC. Cloud Peak owes $407,500 to its suppliers but has no other debts.
Required information
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?
Business
1 answer:
nexus9112 [7]3 years ago
6 0

Answer:

a. Tax basis $550,625

b.Three years

c. $245,000

d. Three years

Explanation:

a. Calculation to determine Lance’s tax basis in his LLC interest

Lance’s tax basis in his LLC interest will be $550,625 ( $245,000+$305,625)

Based on the information given Lance’s basis in his LLC INTEREST is been made up of the amount of $245,000 basis of the investment property he transferred to the LLC including his $305,625 share which is calculated as ($407,500 x 75%) of the LLC debt reason been that LLC general debt obligations are tend to be 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. Based on the information given Lance's Holding period in his interest is THREE YEARS in which Lance had been holding investment property.

c. Cloud Peak’s basis in the contributed property will be Basis of $245,000

d. Cloud Peak’s holding period in the contributed property is THREE YEARS.

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7 0
3 years ago
if my movie starts at 11:26 am but it takes 48 minutes to get there what time will it be when I get there
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3 0
2 years ago
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Which of the following statements regarding horizontal analysis is not true? Multiple Choice a.Percentage analysis involves comp
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Horizontal analysis is used in financial statement analysis to compare historical data, such as ratios, or line items, over a number of accounting periods. Horizontal analysis can either use absolute comparisons or percentage comparisons, where the numbers in each succeeding period are expressed as a percentage of the amount in the baseline year, within the baseline amount being listed as 100%.

4 0
3 years ago
Which of the following BEST describes a company's proper liquidity management?
Naddika [18.5K]

Answer:

A. Liquidity management is a balancing act, managers try to find liquidity levels that are neither too high not too low.

Explanation:

Maintaining proper liquidity is an important financial objective of management. Proper liquidity management demands that an entity should be able to meet his short term financial obligation and making sure that liquid assets of the entity are not idle. In order to achieve this, the best way to go is to maintain a level that is neither too high and not too low. Not too high means the entity is not holding too much cash or liquid assets than it currently need to meet its short term financial obligation.

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4 0
2 years ago
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A company has an opening stock of 6,000 units of output. The production planned for the current period is 24,000 units and expec
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Answer:

Explanation:

                                                Last year           Current year

Selling Price                      10                         10

Varaible Price                5                         6

Contribution Margin               5                               4

Break even is the point where total cost is equal to total revenue mean no profit and loss.

company earns the contribution margin after covering the variable cost, now only fix cost remains for break even.

Break Even using FIFO method :  first In first out system

Fix Cost                                                                            =     86000

contribution from opening units(6000*5)                            =     30000

Remaining Fix cost that should be Covered from

current year products                                                            =     56000

 

Units to be sold for break-even ( 56000/4)   = 14000

so we have break even units   6000+14000 = 20000

Fix cost                              = -86000

Opening 6000*5              = 30000

Current   14000*4             = 56000

Profit                                   = 0

Break Even using LIFO method : Last in first out

Fix Cost                                                                            =     86000

Break even =  Fix Cost / Contribution margin

Break even =  86000/4 =21500

current production is 24000 which is higher than break even units so we can cover the fix cost from current year production because company is using lifo method. we do not need opening units for the break even.

4 0
3 years ago
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