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27 July, 14:33

When Padgett Properties LLC was formed, Nova contributed land (value of $200,000 and basis of $50,000) and $100,000 cash, and Oscar contributed cash of $300,000. Both members received a 50% interest in LLC profits and capital.

What is Padgett's tax basis in the land?

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  1. 27 July, 14:45
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    The correct answer is $50,000.

    Explanation:

    According to the scenario, the given data are as follows:

    Nova contributed land of value = $200,000

    Nova contributed land of Basis = $50,000

    Nova contributed cash = $100,000

    Oscar Contributed cash = $300,000

    So, we can analyze the Padgett's tax basis in the land by using following method:

    As we know Nova contributed land of Basis is the only tax basis in the land for Padgett's.

    So, Padgett's tax basis in the land = Nova contributed land of Basis

    Padgett's tax basis in the land = $50,000.
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