Brad Is a 40% Member in the BB LLC

question 166

Multiple Choice

Brad is a 40% member in the BB LLC. At the beginning of the tax year, his capital account showed a balance of $120,000. In this case, his capital account equals his basis in the LLC interest excluding his share of the LLC's debts. His prior year-end Schedule K-1 showed recourse debt (guaranteed by Brad) and nonrecourse debt of
$10,000 and $20,000, respectively. During the current year, BB reported net ordinary income of $200,000 and nondeductible expenses of $2,000. There were no distributions during the year. At the end of the year, Brad's current year Schedule K-1 showed recourse (guaranteed) and nonrecourse debt of $20,000 and $30,000, respectively. How much is Brad's basis in the LLC interest at the end of the year?

• A) $199,200.
• B) $200,000.
• C) $220,000.
• D) $249,200.
• E) $250,000.

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Definitions:

Rapid Pulse

An abnormally fast heartbeat rate, which can be a symptom of various conditions or responses, such as anxiety, fever, or heart issues.

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