Xena and Xavier Form the XX LLC

question 112

Multiple Choice

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) $25,000 land, $0 equipment, $30,000 inventory; $55,000 partnership interest.
• B) $40,000 land, $0 equipment, $30,000 inventory; $90,000 partnership interest.
• C) $25,000 land, $35,000 equipment, $30,000 inventory; $105,000 partnership interest.
• D) $40,000 land, $35,000 equipment, $40,000 inventory; $135,000 partnership interest.

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Definitions:

Good First Serves

A term generally used in tennis indicating the number of successful initial serves in a match.

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A measure of the likelihood or chance that a particular event will occur.

Overbooks

The practice of selling more tickets or reservations than available capacity, commonly used by airlines and hotels to compensate for no-shows.

Probability

The calculation of an event's chance of happening, depicted on a scale from 0 to 1.