Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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. The LLC has $40,000 of hot assets, of which Sweeney's share is $10,000. 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 what is its character? How much is Jana's adjusted basis for her LLC interest?

Sweeney's total gain on the sale is $_____ of which $_____ is recognized as ordinary income, with the remaining $_____ recognized as a long-term capital gain. Jana's adjusted basis for her LLC interest is $_____.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals Of Accounting

Authors: Claudia Gilbertson

10th Edition

1111581169, 978-1111581169

More Books

Students also viewed these Accounting questions

Question

What is the use of bootstrap program?

Answered: 1 week ago

Question

What is a process and process table?

Answered: 1 week ago

Question

What is Industrial Economics and Theory of Firm?

Answered: 1 week ago

Question

2. How do I perform this role?

Answered: 1 week ago