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 $160,400. The fair market value of the interest is $176,440. In a proportionate current distribution, the LLC distributes $32,080 cash and equipment with an adjusted basis of $80,200 and a fair market value of $120,300 to him on that date.

Required:
A) Franco's adjusted basis in the LLC interest after the distribution is $ __________ and his basis in the equipment received is $ _______.

Answer 1

Adjusted basis = $48,120

Basis of equipment is given as $80,200

Step-by-step explanation:

Given data:

Yearly basis of Franco = $160,400

market value of interest = $176,440

Distributed cash = $32,080

Adjusted basis = $80,200

Adjusted basis after distribution is calculated as

Adjusted basis = yearly basis - distributed cash - equipment adjusted basis

Adjusted basis = 160,400 - 32080 - 80,200

Adjusted basis = $48,120

in the question, basis of equipment is given as $80,200