Roman was a 40% partner in the calendar year POR LLC. When Roman died on April 30, the interest transferred to his estate. On November 1 of that year, Tiwanda, an unrelated third party, negotiated a buyout and acquired Roman's interest with the approval of the other LLC members). The LLC's operating agreement provides that a monthly allocation will be used to prorate income when required. If the LLC's income for the year was $300,000, how will it be allocated?
A) $0 to Roman, $0 to Roman's estate, $120,000 to Tiwanda.
B) $40,000 to Roman, $60,000 to Roman's estate, $20,000 to Tiwanda.
C) $0 to Roman, $100,000 to Roman's estate, $20,000 to Tiwanda.
D) $100,000 to Roman, $0 to Roman's estate, $20,000 to Tiwanda.
E) $0 to Roman, $120,000 to Roman's estate, $0 to Tiwanda.

Question

Quizplus · Accepted Answer

Roman's share for the 4 months he was alive is 40% of 4/12 of the annual income, which is $40,000. Roman's estate then holds the interest for 6 months, earning 40% of 6/12 of the annual income, which is $60,000. Tiwanda, acquiring the interest for the last 2 months, earns 40% of 2/12 of the annual income, totaling $20,000.

Roman Was a 40% Partner in the Calendar Year POR