The BR LLC Owns an Unrealized Receivable with a Basis

question 225

Multiple Choice

The BR LLC owns an unrealized receivable with a basis of $0 and fair market value of $200,000 plus cash of $200,000. If BREE distributes $20,000 of the receivable to 50% member Brenda and $20,000 of cash to 50%
Member Renee, which one of the following statements is true?

• A) Brenda recognizes $20,000 of capital gain.
• B) The partnership recognizes $20,000 of ordinary income.
• C) Renee recognizes $10,000 of ordinary income.
• D) Brenda recognizes $10,000 of ordinary income.
• E) Because both partners receive the same value, none of the parties recognizes gross income.

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Definitions:

Institute of Social Research

An organization or facility dedicated to conducting and disseminating research on social issues, often associated with academic institutions.

Nazi Regime

The Nazi Regime refers to the totalitarian government led by Adolf Hitler in Germany from 1933 to 1945, which is known for initiating World War II and committing massive atrocities, including the Holocaust.

Capitalist Society

is a socio-economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods determined mainly by competition in a free market.

Joseph Schumpeter

An economist and political scientist known for his theories on economic development and capitalism, particularly the concept of "creative destruction."