Beth's basis in her BBDE LLC interest is $40,000 at the beginning of the tax year.Her allocable share of LLC items are as follows: $30,000 of ordinary income,$5,000 tax-exempt interest income,and a $12,000 long-term capital gain.In addition,the LLC distributed $20,000 of cash to Beth during the year.Assuming the LLC had no liabilities at the beginning or the end of the year,Beth's ending basis in her LLC interest is $67,000.

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Beth's basis in her LLC interest is increased by her allocable share of LLC items, and decreased by the amount of cash distributions she receives. In this case, Beth's basis is increased by $30,000 of ordinary income, $5,000 of tax-exempt interest income, and $12,000 of long-term capital gain, for a total increase of $47,000. Her basis is then decreased by the $20,000 cash distribution, resulting in an ending basis of $67,000.

Beth's Basis in Her BBDE LLC Interest Is $40,000 at the Beginning