Exercise 21-19 (a) (LO. 3)

On January 11 of the current year, Birchfield and Torcoletti form the BT LLC. Their contributions to the LLC are as follows:

Adjusted Basis Fair Market Value
From Birchfield:
Cash $112,000 $112,000
Accounts receivable $0 $69,000
Inventory $205,000 $215,000
From Torcoletti:
Cash $396,000 $396,000

By January 31, BT collects the receivables and sells the inventory for $215,000 cash.

BT realized the following income in the current year from these transactions:
a.

of $
from collecting cash basis accounts receivable.
b.

of $
from sale of inventory.

c. This rule exists to ensure that a partner and partnership

property between themselves and alter the inherent character of the underlying deferred income, gain, loss, or deduction.