5 Exercise 21-25 (Algorithmic) (LO. 15)Sweeney originally contributed $226,000 in cash for a one-fourth interest in the Gilbert LLC. Duringthe several years that Sweeney was a member of the LLC, his share of the LLC's income was$135,600 and he withdrew $90,400 cash. The LLC's liabilities are $113,000, of which Sweeney'sshare is $28,250. The LLC has $56,500 of hot assets, of which Sweeney's share is $14,125. Sweeneysells his LLC interest to Jana for $298,320 cash, with Jana also assuming Sweeney's share of theLLC's liabilities.How much is Sweeney's gain on the sale, and what is its character?Sweeney's total gain on the sale is $ordinary income, with the remaining $X, of which $recognized as a long-term capital gain.How much is Jana's adjusted basis for her LLC interest?Xrecognized as

We must compute Sweeney's adjusted basis in the LLC stake in order to ascertain the gain on the…

Answered: Sweeney originally con

Business

Accounting

Sweeney originally con

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Exercise 21-25 (Algorithmic) (LO. 15)
Sweeney originally contributed $226,000 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
$135,600 and he withdrew $90,400 cash. The LLC's liabilities are $113,000, of which Sweeney's
share is $28,250. The LLC has $56,500 of hot assets, of which Sweeney's share is $14,125. Sweeney
sells his LLC interest to Jana for $298,320 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 $
ordinary income, with the remaining $
X, of which $
recognized as a long-term capital gain.
How much is Jana's adjusted basis for her LLC interest?
X
recognized as

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