Pat is a 40% member of the P&J LLC. Her basis is $30,000 immediately before the LLC distributes to her $40,000 of cash and land (basis to the partnership of $25,000 and fair market value of $50,000). As a result of the proportionate nonliquidating distribution, Pat recognizes a gain of $10,000 and her basis in the land is $0.

Question

Quizplus · Accepted Answer

Pat's basis in the land is $20,000, not $0.

Pat Is a 40% Member of the P&J LLC