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

question 105

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)$14,500
• C)$17,000
• D)$19,500

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Definitions:

Pretend Play

A form of play among children where they simulate actions and scenarios from the real world, using their imagination and sometimes toys to enact different roles and activities.

Mental Acts

Psychological activities involving cognition, such as thinking, reasoning, and problem-solving, typically occurring within the mind.

Mutual Exclusivity Assumption

The cognitive bias in children to assume that each object only has one name and each name refers to only one object, facilitating language acquisition.

Fetal Hormones

Hormones produced by the fetus during pregnancy that play critical roles in its development, influencing various physiological and developmental processes.