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16 August, 13:39

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.

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  1. 16 August, 16:36
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    c. $25,000

    Explanation:

    The computation of gain (loss) is shown below:-

    Land value $50,000

    Less: Bob adjusted basis $30,000

    Built in gain allocated to Bob $20,000

    Sales consideration $60,000

    Less: Land value $50,000

    Gain to be allocated between

    two members $10,000

    Total gain allocated to Bob

    ($20,000 + $10,000 * 50%) $25,000
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