Part 1 Yiru, Hein and Noor formed the Ho, LLC, a cash basis, calendar year entity reporting as a partnership for tax purposes at the beginning of 2023. The property contributed by each owner is described as follows: Yiru -40% Capital and Profits Interest: Land Hein -40% Capital and Profits Interest: Equipment Cash Noor-20% Capital and Profits Interest: Accounts Receivable Adjusted Basis $120,000 $-0- 125,000 Fair Market Value $150,000 $25,000 125,000 $-0- $75,000 The equipment is 5-year MACRS property acquired for $25,000 and placed in service in 2021. Show your work a. Determine the amount of gain or loss recognized to the owner's and the company, the inside bases, and each owner's outside basis immediately after this transaction./nb. How would the sale of the equipment for $22,000 on January 2, 2023, be handled-amount, character, and allocation? c. How would the sale of the real estate on January 2, 2023, for $145,000 be handled-amount, character, and allocation? d. How would depreciation be allocated to the owners under the traditional method and the traditional method with a curative effect? Note that the tax depreciation is zero (you may use any method and life to determine the depreciation on the books). Be thoughtful! Part 2 How are the assets in Part 1 reflected on the balance sheet of the partnership? How much are the partners' initial capital accounts? How will the capital accounts change subsequent to formation? Part 3 Assume that in Part 1, instead of contributing the land, Yiru sold the land to the partnership for $150,000. The partnership used some of its cash and borrowed the balance to make the purchase. How would this be reported? Can this really be treated as a sale? Part 4 Assume that the land in Part 1 was actually worth $200,000 and was subject to a $50,000 nonrecourse liability. How much is Yuri's basis in Ho, LLC? How much is Noor's basis?

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