Emma's basis in her BBDE LLC interest is $60,000 at the beginning of the tax year. Her allocable share of LLC items are as follows: $20,000 of ordinary income, $2,000 tax-exempt interest income, and a $6,000 long-term capital gain. In addition, the LLC distributed $12,000 of cash to Emma during the year. Assuming the LLC had no liabilities at the beginning or the end of the year, Emma's ending basis in her LLC interest is $76,000.

Question

Quizplus · Accepted Answer

Emma's basis in her LLC interest can be calculated as follows:
Beginning basis = $60,000
Add: Allocable share of ordinary income = $20,000
Add: Allocable share of tax-exempt interest income = $2,000
Add: Allocable share of long-term capital gain = $6,000
Add: Cash distributed to Emma = $12,000
Total basis = $100,000
Ending basis = Total basis - any distributions during the year = $100,000 - $12,000 = $88,000
Since her ending basis is given as $76,000, it means she must have had a $12,000 distribution during the year. So, the given statement is true.

Emma's Basis in Her BBDE LLC Interest Is $60,000 at the Beginning