On January 2 of the current year, Fenton and Myers form the FM LLC. Their contributions to the LLC are as follows:
|
|
Adjusted Basis
|
Fair Market Value
|
|
From Fenton: Cash
|
$ 50,000
|
$ 50,000
|
|
Accounts receivable
|
-0-
|
90,000
|
|
Inventory
|
25,000
|
60,000
|
|
From Myers: Cash
|
200,000
|
200,000
|
Within 30 days of formation, FM collects the receivables and sells the inventory for $60,000 cash. How much income does FM recognize from these transactions, and what is its character?