The BLM LLC's balance sheet on August 31 of the current year is 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) $70,000 capital gain; $50,000 ordinary income.
E) None of the above.
Correct Answer:
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