Mo Burrow owns a 25% interest in Bengal LLC. On December 31, 2021, Mo Burrow's basis in the LLC is $40,000 and its fair market value is $70,000. On that date, the LLC distributes $25,000 in cash and a parcel of land to Mo Burrow that s worth $30,000 but in which the LLC has a basis of $13,000. a. What is the gain or loss recognized by Mo Burrow and Bengal LLC on this distribution? b. What is Mo Burrow's basis in the LLC after the distribution? c. What is Mo Burrow's basis in the parcel of land that was distributed to him? d. If Mo Burrow sells the parcel of land on January 1, 2022 for value, will Mo Burrow recognize a gain or a loss? (show your calculations)
Mo Burrow owns a 25% interest in Bengal LLC. On December 31, 2021, Mo Burrow's basis in the LLC is $40,000 and its fair market value is $70,000. On that date, the LLC distributes $25,000 in cash and a parcel of land to Mo Burrow that s worth $30,000 but in which the LLC has a basis of $13,000. a. What is the gain or loss recognized by Mo Burrow and Bengal LLC on this distribution? b. What is Mo Burrow's basis in the LLC after the distribution? c. What is Mo Burrow's basis in the parcel of land that was distributed to him? d. If Mo Burrow sells the parcel of land on January 1, 2022 for value, will Mo Burrow recognize a gain or a loss? (show your calculations)
Chapter5: Corporations: Earnings & Profits And Dividend Distributions
Section: Chapter Questions
Problem 39P
Related questions
Question
Mo Burrow owns a 25% interest in Bengal LLC. On December 31, 2021, Mo Burrow's basis in the LLC is $40,000 and its fair market value is $70,000. On that date, the LLC distributes $25,000 in cash and a parcel of land to Mo Burrow that s worth $30,000 but in which the LLC has a basis of $13,000.
a. What is the gain or loss recognized by Mo Burrow and Bengal LLC on this distribution?
b. What is Mo Burrow's basis in the LLC after the distribution?
c. What is Mo Burrow's basis in the parcel of land that was distributed to him?
d. If Mo Burrow sells the parcel of land on January 1, 2022 for value, will Mo Burrow recognize a gain or a loss? (show your calculations)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 6 steps with 3 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT