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:

Private Employment Agencies

Organizations that match employers with job seekers for a fee.

Headhunters

Professional recruiters who specialize in finding and recruiting candidates for specialized and often high-level positions within various industries.

Job Referrals

The process of recommending a potential candidate for a position within a company by someone within or associated with the organization.

Supply Chain Management

The management of the flow of goods and services, involving the movement and storage of raw materials, of work-in-process inventory, and of finished goods from point of origin to point of consumption.