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?
$

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

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