Sweeney originally contributed $230,000 in cash for a one-fourth interest in the Gilbert LLC. During the...

Sweeney originally contributed $230,000 in cash for a one-fourth interest in the Gilbert LLC. During the several years that Sweeney was a member of the LLC, his share of the LLC's income was $138,000 and he withdrew $92,000 cash. The LLC's liabilities are $115,000, of which Sweeney's share is $28,750. The LLC has $57,500 of hot assets, of which Sweeney's share is $14,375. Sweeney sells his LLC interest to Jana for $303,600 cash, with Jana also assuming Sweeney's share of the LLC's liabilities.

How much is Sweeney's gain on the sale, and what is its character?

Sweeney's total gain on the sale is $, of which $ recognized as ordinary income, with the remaining
$ recognized as a long-term capital gain.

How much is Jana's adjusted basis for her LLC interest?
$

Solutions

Expert Solution

Sweeney sells his LLC interest to Jana	$303,600
add -in LLC's liabilities Sweeney's share is	$28,750
Adjusted basis	332350

Sweeney originally contributed	$ 230000
add - share of the LLC's income	$ 138000
less -withdrew	($ 92000)
	$ 276000

276000+28750 = 304750

gain on sale = $ 332350 - $ 304750 = $ 27600

jana adjusted basis = total cash paid to sweeny + total liability share of sweeny transfer = $ 303600 +28750 = 332350

ekkarill92 answered 2 years ago

Next > < Previous

Related Solutions

Kevan, Jerry, and Dave formed Albee LLC. Jerry and Dave each contributed $245,000 in cash. Kevan...

Kevan, Jerry, and Dave formed Albee LLC. Jerry and Dave each contributed $245,000 in cash. Kevan contributed the following assets: Basis Fair Market Value Kevan: Cash $ 15,000 $ 15,000 Land* 120,000 440,000 Totals $ 135,000 $ 455,000 *Nonrecourse debt secured by the land equals $210,000 Each member received a one-third capital and profits interest in the LLC. (Leave no answer blank. Enter zero if applicable. Do not round intermediate calculations.)

During August, Hill Sales Company had these summary transactions: 1. Cash sales of $230,000, subject to...

During August, Hill Sales Company had these summary transactions: 1. Cash sales of $230,000, subject to sales taxes of 6%. 2. Sales on account of $260,000, subject to sales taxes of 6%. 3. Paid the sales taxes to the state Prepare journal entries to record the preceding transactions. q2 On August 1, 2016, Pereira Corporation has sold, on account, 1,800 Wiglows to Mendez Company at $480 each. Mendez also purchased a 1-year service-type warranty on all the Wiglows for $10...

Three individuals recently created a LLC, with equal interest. One will be working in the business...

Three individuals recently created a LLC, with equal interest. One will be working in the business as manager and will receive a salary of $60,000; all will have substantial income from other sources. The LLC expects to be profitable and will earn approximately $30,000 of ordinary income and $30,000 or long-term capital gain. What tax issues should the members consider regarding the LLC's initial year of operations?

Consider the following cash flows and interest rates: End of Year Interest Rate During Period Cash...

Consider the following cash flows and interest rates: End of Year Interest Rate During Period Cash Flow at End of Period 0 $0 1 10% $2,000 2 8% −$3,000 3 12% $4,000 A. Determine the future worth of this series of cash flows. B. Determine the present worth of this series of cash flows. C. Determine a 3-year uniform annual series that is equivalent to the original series.

Which one of the following is a cash outflow in cash budgeting? Interest earned Interest paid...

Which one of the following is a cash outflow in cash budgeting? Interest earned Interest paid Proceeds from fixed asset sales Proceeds from stock sales

ABC inc has the following transactions during December 2019 Dec 1 Share holders contributed $67,000 cash...

ABC inc has the following transactions during December 2019 Dec 1 Share holders contributed $67,000 cash in exchange for common stock 1 Purchased a delivery van with cash, $25,000 1 Paid $9,000 cash as rent for Dec, Jan and Feb 3 Purchased supplies on account $1,800 9 Made deliveries for several customers on account $5,700 14 Received $1,500 cash from a customer as advanced payment for deliveries scheduled through January 17 Paid $1,200 cash to suppliers towards accounts payable 20...

Which one of the following affects cash during a period?

Which one of the following affects cash during a period? Select one: a. Declaration of a cash dividend b. Recording depreciation expense c. Payment of an accounts payable d. Write-off of an uncollectible account receivable

A reset mortgage allows for one interest rate reset during the life of the loan. The...

A reset mortgage allows for one interest rate reset during the life of the loan. The mortgage rate will be reset after 5 years, to fully amortize at the end of the original 30 year period (i.e. after 25 more years). For a 6 5/8%, $120,000, mortgage, compute the reset payment if the new rate resets to 7 3/8%. (Hint: calculate how much balance is left after you pay for 5 years at the rate of 6.625%, then use the...

Diana, a partner in the cash basis HDA Partnership, has a one-third interest in partnership profits...

Diana, a partner in the cash basis HDA Partnership, has a one-third interest in partnership profits and losses. The partnership's balance sheet at the end of the current year is as follows: Basis FMV Basis FMV Cash $120,000 $120,000 Hannah, capital $90,000 $250,000 Receivables 0 240,000 Diana, capital 90,000 250,000 Land 150,000 390,000 Alexis, capital 90,000 250,000 Total $270,000 $750,000 Total $270,000 $750,000 Diana sells her interest in the HDA Partnership to Kenneth at the end of the current year...

Partner A owns a one-interest in the ABC cash method, calendar year general partnership, which manufactures...

Partner A owns a one-interest in the ABC cash method, calendar year general partnership, which manufactures and sells inventory. A, B and C, the original partners, each made initial cash contributions of $75,000. All income has been distributed as earned. On January 1st, A sells his interest in the partnership to D. Consider the tax consequences of the sale to A, assuming he has owned his partnership interest for several years. The balance sheet of the ABC partnership (which is...

Subjects