On January 1, 2019, Audrey acquired a 30% interest in ABC, an existing LLC. In exchange for her interest, she paid $80,000 cash, and transferred land with FMV of $120,000 (basis to her, $35,000). ABC's ordinary income for 2019 was $500,000. Audrey received a cash distribution of $77,000 from ABC in December. a. What gain or loss, if any, does Audrey recognize as a result of the transaction on January 1? Explain briefly. b. What is Audrey's adjusted basis in her interest in ABC on January 1? c. How much income from ABC does Audrey report on her 2019 tax return? [Ignore QBI] d. What is Audrey's adjusted basis in her interest in ABC on December 31?
On January 1, 2019, Audrey acquired a 30% interest in ABC, an existing LLC. In exchange for her interest, she paid $80,000 cash, and transferred land with FMV of $120,000 (basis to her, $35,000). ABC's ordinary income for 2019 was $500,000. Audrey received a cash distribution of $77,000 from ABC in December. a. What gain or loss, if any, does Audrey recognize as a result of the transaction on January 1? Explain briefly. b. What is Audrey's adjusted basis in her interest in ABC on January 1? c. How much income from ABC does Audrey report on her 2019 tax return? [Ignore QBI] d. What is Audrey's adjusted basis in her interest in ABC on December 31?
Chapter20: Corporations And Partnerships
Section: Chapter Questions
Problem 57P
Related questions
Question
![On January 1, 2019, Audrey acquired a 30% interest in ABC, an existing LLC. In
exchange for her interest, she paid $80,000 cash, and transferred land with FMV of
$120,000 (basis to her, $35,000). ABC's ordinary income for 2019 was $500,000.
Audrey received a cash distribution of $77,000 from ABC in December.
a. What gain or loss, if any, does Audrey recognize as a result of the transaction on
January 1? Explain briefly.
b. What is Audrey's adjusted basis in her interest in ABC on January 1?
c. How much income from ABC does Audrey report on her 2019 tax return?
[Ignore QBI]
d. What is Audrey's adjusted basis in her interest in ABC on December 31?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F13655aa5-a9d2-4e3d-a539-94bb3bd89348%2F4e3fcac2-af77-46a4-ad63-7c8a10cf46ad%2F9pttywa_processed.png&w=3840&q=75)
Transcribed Image Text:On January 1, 2019, Audrey acquired a 30% interest in ABC, an existing LLC. In
exchange for her interest, she paid $80,000 cash, and transferred land with FMV of
$120,000 (basis to her, $35,000). ABC's ordinary income for 2019 was $500,000.
Audrey received a cash distribution of $77,000 from ABC in December.
a. What gain or loss, if any, does Audrey recognize as a result of the transaction on
January 1? Explain briefly.
b. What is Audrey's adjusted basis in her interest in ABC on January 1?
c. How much income from ABC does Audrey report on her 2019 tax return?
[Ignore QBI]
d. What is Audrey's adjusted basis in her interest in ABC on December 31?
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