Frank and Bob are equal members in Soxy Socks, LLC. When forming the LLC, Frank contributed $60,000 in cash and $60,000 worth of equipment. Frank's adjusted basis in the equipment was $45,000. Bob contributed $60,000 in cash and $60,000 worth of land. Bob's adjusted basis in the land was $20,000. On 3/15/X4, Soxy Socks sells the land Bob contributed for $68,000. How much gain (loss) related to this transaction will Bob report on his X4 return?
A) $8,000
B) $12,000
C) $44,000
D) $52,000

Question

Quizplus · Accepted Answer

Bob's basis in the land was $20,000, but the land was sold for $68,000. This results in a gain of $48,000 ($68,000 - $20,000). Since Bob is an equal member in the LLC, he is responsible for reporting 50% of the gain, or $24,000.

Frank and Bob Are Equal Members in Soxy Socks, LLC