If the lender holding the nonrecourse debt secured by Kevan’s land required Kevan to guarantee 33.33 percent of the debt and Jerry to guarantee the remaining 66.67 percent of the debt when Albee LLC was formed, how much gain or loss will Kevan recognize?

Kevin will recognised loss of $45,003

Explanation:

The question is not completed. The following data for Kevan are missing.

Kevan:

Cash contributed = $15,000

Land = $120,000

Nonrecourse debt relief = $210,000

Debt secured forming Albee LLC = $90,000

Note that Kevin is required to guarantee 33.33% of the debt

Therefore, the debt is ( 33.33/100) x 90,000 = $29,997

Therefore, Kevin gain or loss = (210,000 - 120,000 - 15,000 - 29,997) in $ = $45,003

This $45,003 will be a loss because the nonrecourse debt of $210,000 is more than Kevin's total money from land, contributed cash and share of guarantee loan.

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