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Charles and Don are equal Members in the CD Limited Liability Company (LLC). Charles contributes Cash of $20,000 and Don contributes equipment valued at $20,000, in which Basis his Adjusted Basis is $10,000. The equipment contributed by Don is depreciable for federal income tax purposes using a straight line method at the rate of 20% per year (ignoring the first year convention). Each Member's Capital Account is credited with the $20,000 value of his contribution.
Assuming that the LLC's total income over the remaining 5 year life of the equipment exceeds its total losses and deductions, other than depreciation, by $20,000 determine
(a) each of Member's Tax Basis in his Member Interest in the LLC
(b) each Member's Capital Account

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  • Reference No.:- M945314

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