Business, 22.04.2020 02:35 P4thing

Nicholas is a 25% owner in the DDBN LLC (a calendar year entity). At the end of the last tax year, Nicholasâsbasis in his interest was $50,000, including his $20,000 share of LLC liabilities. On July 1 of the current tax year, Nicholas sells his LLC interest to Anna for $80,000 cash. In addition, Anna assumes Nicholasâs share of LLC liabilities, which, at that date, was $15,000. During the current tax year, DDBNâs taxable income is $120,000 (earned evenly during the year). Nicholasâs share of the LLCâs unrealized receivables is valued at $6,000 ($0 basis). At the sale date, what is Nicholasâs basis in his LLC interest, how much gain or loss must he recognize, and what is the character of the gain or loss?a. $45,000 basis; $6,000 ordinary income; $44,000 capital gain. b. $60,000 basis; $6,000 ordinary income; $29,000 capital gain. c. $60,000 basis; $35,000 capital gain. d. $75,000 basis; $0 ordinary income; $20,000 capital gain. e. $75,000 basis; $6,000 ordinary income; $14,000 capital gain.

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Nicholas is a 25% owner in the DDBN LLC (a calendar year entity). At the end of the last tax year, N...

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