Marcie is a 40% member of the M&A LLC. Her basis is $10,000 immediately before the LLC distributes to her
$30,000 of cash and land (basis to the LLC of $20,000 and fair market value of $25,000). As a result of the proportionate, current (nonliquidating) distribution, Marcie recognizes a gain of $20,000 and her basis in the land is
$0.

Question

Quizplus · Accepted Answer

Marcie's basis in the land is $0 because the land's fair market value ($25,000) is greater than her basis in the LLC ($10,000). As a result, she recognizes a gain of $20,000 ($25,000 - $10,000) on the distribution of the land.

Marcie Is a 40% Member of the M&A LLC