Part A: Answer each of the following questions. Be sure to show all of your work and calculations.

Problem 2-1 o Ben and Jerry organize their new entity as an LLC on May 16th of  the year 1. What is the default tax classification for this entity? Are there  any alternative classification(s) available? If so, how do Ben and Jerry elect  one of these alternate classification(s) and what are the tax consequences of  doing so? · Problem 2-2 o On February 1 of year 1, Richard, Mike, Patrick, and  Sean form Brothers Corp and transfer the following items: Property Transferred  Transferor Asset Basis to Transferor FMV Number of Common Shares Issued Richard  Land 12000 30000 400 Building 38000 70000 Mortgage on Land and Building 60000  60000 Mike Machines 25000 40000 300 Patrick Truck 15000 10000 50 Sean Legal  Services 0 10000 100 Richard purchased the building and land several years ago,  $50,000 for the building, and $12,000 for the land. Depreciation has been  claimed using the straight line method. In addition to the machines, Mike  received a note from Brothers corp. due in 3 years for $10,000 at the market  interest rate. Mike originally purchase the machines 3 years ago for $50,000. In  addition to the truck, Patrick received a cash payment of $5,000. Patrick’s  truck is 2 years old with an original price of $20,000. (a) Does the transaction  meet the requirements of section 351? (b) What are the amounts of the gains or  losses recognized by Richard, Mike, Patrick, Sean, and Brothers? (c) What is  each shareholder’s basis in their Brothers stock? When does the holding period  for the stock begin? (d) What is Brothers’ basis in its property and services?  When does the holding period for each property begin? · Problem 2-3 o On June  24th of year 1, Alec, Bryce, and Connor form Triplets Corporation. They transfer  the following assets: Property Transferred Transferor Asset Basis to Transferor  FMV Number of Common Shares Issued Alec Land $200,000.00 $50,000.00 500 Bryce  Production Equipment - 25,000.00 250 Connor Accounting Services - 25,000.00 250  Alec purchased the land 5 years ago for $200,000. Bryce purchase the production  equipment 3 years ago for $48,000 and it is fully depreciated. (a) Does the  transaction meet the requirements of section 351? (b) What are the amounts of  the gains or losses recognized by Alec, Bryce, Connor, and Triplets? (c) What is  each shareholders basis in their stock? When does the holding period for the  stock begin? (d) What is Triplets’ basis in each asset? When does the holding  period begin for each asset? (e) How might they restructure this transaction to  make it more beneficial from a tax perspective? Read the scenario and respond to  the questions. Support your answers with calculations

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