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, nonliquidating distribution, Marcie recognizes a gain of $20,000 and her basis in the land is $0.

Question

Quizplus · Accepted Answer

The distribution is proportionate, so Marcie's share of the land is $25,000 x 40% = $10,000. Her basis in the land is $0 because her basis in the LLC is reduced by the amount of cash and the fair market value of the land distributed to her.

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