In a proportionate liquidating distribution of his 40% interest in the RST LLC, Stuart received cash ($100,000), land (basis of $60,000 and value of $90,000), and inventory (basis of $30,000 and value of $40,000). In addition, Stuart is relieved of his $80,000 share of the LLC's liabilities. Stuart's basis in RST (including his share of LLC liabilities) was
$200,000 immediately prior to this distribution.

a. How much gain or loss does Stuart recognize on this distribution?
b. What is Stuart's basis in the land and inventory he receives in the distribution?

Question

In a proportionate liquidating distribution of his 40% interest in the RST LLC, Stuart received cash ($100,000), land (basis of $60,000 and value of $90,000), and inventory (basis of $30,000 and value of $40,000). In addition, Stuart is relieved of his $80,000 share of the LLC's liabilities. Stuart's basis in RST (including his share of LLC liabilities) was
$200,000 immediately prior to this distribution.

a. How much gain or loss does Stuart recognize on this distribution?
b. What is Stuart's basis in the land and inventory he receives in the distribution?

Quizplus · Accepted Answer

The Answer of In a proportionate liquidating distribution of his 40% interest in the RST LLC, Stuart received cash ($100,000), land (basis of $60,000 and value of $90,000), and inventory (basis of $30,000 and value of $40,000). In addition, Stuart is relieved of his $80,000 share of the LLC's liabilities. Stuart's basis in RST (including his share of LLC liabilities) was
$200,000 immediately prior to this distribution.

a. How much gain or loss does Stuart recognize on this distribution?
b. What is Stuart's basis in the land and inventory he receives in the distribution?

In a Proportionate Liquidating Distribution of His 40% Interest in the RST