Question

Franco owns a 60% interest in the Dulera LLC. On December 31 of the current tax year, his basis in the LLC interest is $171,800. The fair market value of the interest is $188,980. In a proportionate current distribution, the LLC distributes $34,360 cash and equipment with an adjusted basis of $85,900 and a fair market value of $128,850 to him on that date. How much is Franco's adjusted basis in the LLC interest after the distribution and what is the amount of his basis in the equipment received?

Answer 1

Answer: See explanation

Step-by-step explanation:

Franco's adjusted basis in the LLC interest after the distribution will be:

= Current year basis - Cash distributed - Equipment Adjusted basis

= $171,800 - $34,360 - $85,900

= $51540

Also, the basis on the equipment received from the information given will be $85,900.