Question

frank and bob are equal members in soxy socks, llc. when forming the llc, frank contributed $45,000 in cash and $45,000 worth of equipment. frank's adjusted basis in the equipment was $30,000. bob contributed $45,000 in cash and $45,000 worth of land. bob's adjusted basis in the land was $34,500. on 3/15/x4, soxy socks sells the land bob contributed for $65,000. how much gain (loss) related to this transaction will bob report on his x4 return?

Answer 1

Bob will report a gain of $30,500 on his x4 tax return for the sale of the land.

Step-by-step explanation:

When Soxy Socks sells the land that Bob contributed for $65,000, we need to calculate the gain or loss. To do this, we need to compare the selling price with Bob's adjusted basis in the land. Bob's adjusted basis in the land is $34,500. The gain or loss will be the difference between the selling price and the adjusted basis.

Gain or loss = Selling price - Adjusted basis

= $65,000 - $34,500

= $30,500

Therefore, Bob will report a gain of $30,500 on his tax return for the sale of the land.