Tom is talking to his friend Bob, who has an interest in Freedom, LLC, about purchasing his LLC interest. Bob's outside basis in Freedom, LLC is $8,500. This includes his $2,200 one-fourth share of the LLC's debt. Bob's 704(b) capital account is $15,500. If Tom bought Bob's LLC interest for $14,000, what would Tom's outside basis be in Freedom, LLC?

Tom is talking to his friend Bob, who has an interest in Freedom, LLC, about purchasing his LLC interest. Bob's outside basis in Freedom, LLC is $8,500. This includes his $2,200 one-fourth share of the LLC's debt. Bob's 704(b) capital account is $15,500. If Tom bought Bob's LLC interest for $14,000, what would Tom's outside basis be in Freedom, LLC?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Can you help me solve these to arrive to the answer? Thanks in advance!
Prepare your answers using excel or clearly written computations. Show your work for maximum points. 1. Marie and Ramesh form Roundtree Corporation with the transfer of the following. Marie performs personal services for the corporation with a fair market value of $80,000 in exchange for 400 shares of stock. Ramesh contributes an installment note receivable (basis $25,000; fair market value $30,000), land (basis $50,000; fair market value $170,000), and inventory (basis $100,000; fair market value $120,000) in exchange for 1,600 shares. Determine Marie and Ramesh’s current income, gain, or loss; calculate the basis that each takes in the Roundtree stock.
Derek has shares of UltFrisCorp that he would like to transfer, using Section 85, to a holding company that he has recently setup. The ACB and PUC of his UltFrisCorp shares are $30,000. The fair market value of the shares are $1 million. Derek also has $450,000 in his lifetime capital gains exemption that he would like to use as part of this transfer. What is the elected amount that Derek should chose in order to use his lifetime capital gains exemption, and avoid paying tax on the transfer. 1,000,000 30,000 480,000 450,000
In 2021, Ruth transfers the following property for an 80% interest in RGB corporation (1,000 shares): Land with a FMV of $100,000 and an adjusted basis of $20,000. The land had a $40,000 mortgage which was assumed by the corporation. What is the basis of Ruth’s stock in RBG Corporation?
Keith’s sole proprietorship holds assets that, if sold, would yield a gain of $100,000. It also owns assets that would yield a loss of $30,000. Keith incorporates his business using only the gain assets. Two days later, Keith sells the loss assets to the newly formed corporation. What is Keith trying to accomplish? Will he be successful? Explain.
b. If Connie receives a 5 percent profits interest only, how much income must she report, and what is her tax basis in the LLC interest? c. If Connie receives a 5 percent capital and profits interest, how much income must she report, and what is her tax basis in the LLC interest?
When Bruno's basis in his LLC interest is $228,600, he receives cash of $91,440, a proportionate share of inventory, and land in a distribution that liquidates both the LLC and his entire LLC interest. The inventory has a basis to the LLC of $57,150 and a fair market value of $73,152. The land's basis is $102,870, and the fair market value is $91,440. How much gain or loss does Bruno recognize, and what is his basis in the inventory and land received in the distribution? If an amount is zero, enter "0". Bruno recognizes . Bruno's basis in the inventory is $____________ and his basis in the land is $______________
Help me with proper explanation
Rondo and his business associate, Larry, are considering forming a business entity called R&L, but they are unsure about whether to form it as a C corporation, an S corporation, or an LLC taxed as a partnership for tax purposes. Rondo and Larry would each invest $200,000 in the business. Thus, each owner would take an initial basis in his ownership interest of $200,000 no matter which entity type is formed. Shortly after the formation of the entity, the business borrowed $60,000 from the bank. If applicable, this debt will be shared equally between the two owners. A. After taking the loan into account, what is Rondo's tax basis in his R&L stock if R&L is formed as a C corporation? B. After taking the loan into account, what is Rondo's tax basis in his R&L stock if R&L is formed as an S corporation? C. After taking the loan into account, what is Rondo's tax basis in his R&L stock if R&L is formed as an LLC and taxed as a partnership?
See Attached. 9
In 2020, Martin and Rebecca formed White Corporation. Martin transfers real estate with an adjusted basis of $260,000 and a fair market value of $350,000 to the newly formed White Corporation in exchange for 75% of the common stock of White Corporation. The real estate was encumbered by a mortgage of $275,000 which White Corporation assumed. Rebecca contributed equipment with a fair market value of $35,000 and an adjusted basis of $15,000 in exchange for 25% of the common stock and a $10,000 bond. What is the amount of gain or loss realized and recognized by Martin on the transfer of the real estate? What basis does Martin take in White Corporation stock? What basis does White Corporation take in the real estate contributed by Martin? What is the amount of gain or loss realized and recognized by Rebecca on the transfer of the equipment? What basis does Rebecca take in White Corporation stock? What basis does White Corporation take in the equipment contributed by Rebecca?
Heather and Howie form HH Company. In exchange for 50% of the stock, Heather contributes cash of $7,000. For the remaining 50%, Howie contributes a truck with a FMV of $7,000 (basis of $10,000). Which of the following statements is correct? The basis of the truck to HH Company is $7,000. All of the statements are correct. Howie will report a loss of $3,000. Howie will have a basis in his stock of $10,000