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 that 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 is increased by her allocable share of LLC items and decreased by the amount of cash distributions she receives. Her allocable share of LLC items is $20,000 of ordinary income, $2,000 tax-exempt interest income, and a $6,000 long-term capital gain. She received $12,000 of cash distributions from the LLC. Therefore, her ending basis in her LLC interest is $60,000 + $20,000 + $2,000 + $6,000 - $12,000 = $76,000.

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