The BLM LLC's balance sheet on August 31 reads as follows. The nonrecourse debt is shared equally among the LLC members. On that date, Lillie sells her one-third interest to Robyn for $170,000, including cash and relief of Lillie's share of the nonrecourse debt. Lillie's outside basis for her interest in the LLC is $50,000, including her share of the LLC's debt. How much capital gain and/or ordinary income will Lillie recognize on the sale?
A) $100,000 capital gain? $50,000 ordinary income.
B) $120,000 capital gain? $0 ordinary income.
C) $150,000 capital gain? $0 ordinary income.
D) $150,000 capital gain? $50,000 ordinary income
E) $70,000 capital gain? $50,000 ordinary income.
Correct Answer:
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