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25 Hide or show questions Progress:25/50 items Calculator Xena and Xavier form the XX LLC. Xena...

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    Xena and Xavier form the XX LLC. Xena contributes cash of $20,000, land (basis = $40,000; fair market value = $25,000), equipment (basis = $0; fair market value = $35,000), and inventory (basis = $30,000; fair market value = $40,000). Xavier contributed $120,000 of cash. How much is the partnership's basis in the land, equipment, and inventory, and how much is Xena's basis in the partnership interest?

    a.$40,000 land, $0 equipment, $30,000 inventory; $90,000 partnership interest.

    b.$25,000 land, $35,000 equipment, $30,000 inventory; $105,000 partnership interest.

    c.$40,000 land, $35,000 equipment, $40,000 inventory; $135,000 partnership interest.

    d.$25,000 land, $0 equipment, $30,000 inventory; $55,000 partnership interest.

PLEASE OUTLINE HOW YOU ARRIVED AT THE ANSWER SO I MAY FOLLOW ALONG IN THE FUTURE.  I need to know how to do this when I take my exam. Thanks!!

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Answer #1

Answer is a.$40,000 land, $0 equipment, $30,000 inventory; $90,000 partnership interest.

The partnerships basis will be same as Xena basis in assets.
Total partnership interest = $20000+40000+0+30000 = $90000

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