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Sweeney originally contributed $175,000 in cash for a one-fourth interest in the Gilbert LLC. During the several years that Sweeney was a member of the LLC, his share of the LLC's income was $90,000 and he withdrew $75,000 cash. The LLC's liabilities are $80,000, of which Sweeney's share is $20,000. Sweeney sells his LLC interest to Jana for $225,000 cash, with Jana assuming Sweeney’s share of the LLC’s liabilities.

How much is Sweeney’s gain on the sale, and how much is Jana’s adjusted basis for her LLC interest?

Respuesta :

Answer:

Sweeny’s gain on sale is a 125,000 and it is a capital gain.

Jana’s adjusted basis is 225,000 for her LLC Interest.

Explanation:

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abiolataiwo2015

Sweeney’s gain on the sale is $35,000 and Jana’s adjusted basis for her LLC interest is $245,000.

Gain on sales and adjusted basis

Gain on sales:

Total gain=LLC's income +Sweeney's share -Cash withdrew

Total gain=$90,000+$20,000-$75,000

Total gain=$35,000

Adjusted basis:

Adjusted basis=Jana LLC interest+Sweeney's share

Adjusted basis=$225,000+$20,000

Adjusted basis =$245,000

Therefore Sweeney’s gain on the sale is $35,000 and Jana’s adjusted basis for her LLC interest is $245,000.


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