35. Sam and Drew are equal partners in SD, LLC, formed on June 1 of the current year. Sam contributed Land that he inherited from his Uncle in 2005. Sam’s Uncle purchased the land in 1980 for $30,000. The land was worth $100,000 when Sam’s uncle died. The fair market value of the land was $200,000at the date it was contributed to the partnership.
Drew has significant experience developing real estate. After the LLC is formed, he will prepare a plan for developing the property and secure zoning approvals for the LLC. Drew would normally bill a third party $ 50,000 for these efforts. Drew will also contribute $150,000 of cash in exchange for his 50%interest in the LLC. The value of 50% interest is $200,000