Tom Is Talking to His Friend Bob, Who Has an Interest

question 62

Multiple Choice

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 $10,000. This includes his$2,500 one-fourth share of the LLC's debt. Bob's 704(b) capital account is $17,000. If Tom bought Bob's LLC interest for $17,000, what would Tom's outside basis be in Freedom, LLC?

• A) $10,000.
• B) $19,500.
• C) $14,500.
• D) $17,000.

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Definitions:

Heme

An iron-containing compound that forms an essential part of hemoglobin and some other biological molecules, responsible for binding oxygen.

Renal Artery

The renal artery is a blood vessel that supplies the kidneys with blood, enabling them to filter and cleanse the blood, remove waste and produce urine.

Vena Cava

A large vein carrying deoxygenated blood into the heart; there are two in humans, the superior vena cava and the inferior vena cava.

Capillaries

Microscopic blood vessels that connect arterioles and venules, facilitating the exchange of water, oxygen, carbon dioxide, and other substances between blood and tissues.