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.
a. How is the land recorded for § 704(b) book capital account purposes?
b. What is Padgett's tax basis in the land?
c. If Padgett sells the land several years later for $300,000, how much tax gain will Nova and Oscar report?