Frank and Bob are equal members in Soxy Socks, LLC. When forming the LLC, Frank contributed $50,000 in cash and $50,000 worth of equipment. Frank's adjusted basis in the equipment was $35,000. Bob contributed $50,000 in cash and $50,000 worth of land. Bob's adjusted basis in the land was $30,000. On 3/15/X4, Soxy Socks sells the land Bob contributed for $60,000. How much gain (loss)related to this transaction will Bob report on his X4 return?
A)$10,000
B)$15,000
C)$25,000
D)$35,000

Question

Quizplus · Accepted Answer

Bob will report a gain of $25,000 on his X4 return. This is because the gain is calculated based on the difference between the selling price of the land ($60,000) and Bob's adjusted basis in the land ($30,000) at the time of contribution to the LLC.

Frank and Bob Are Equal Members in Soxy Socks, LLC