Question

Andy is talking to his friend Bruce, who has an interest in Arlington, LLC, about purchasing his LLC interest. Bruce’s outside basis in Arlington, LLC is $21,000. This includes his $5,000 one-fourth share of the LLC’s debt. Bruce’s 704(b) capital account is $25,000. If Andy bought Bruce’s LLC interest for $18,000, what would Andy’s outside basis be in Arlington, LLC?

Answer 1

$23,000

Step-by-step explanation:

Andy’s outside basis be in Arlington, LLC = Payment made for the interest in LLL + Share of the debt of LLC = 18,000 + $5,000 = $23,000

Therefore, Andy’s outside basis be in Arlington, LLC would be $23,000.