Suzy Owns a 30% Interest in the JSD LLC

question 104

Multiple Choice

Suzy owns a 30% interest in the JSD LLC. In liquidation of the entity, Suzy receives a proportionate distribution of $30,000 cash, inventory (basis of $16,000, fair market value of $18,000) , and land (basis of $25,000, fair market value of $30,000) . Suzy's basis in the entity immediately before the distribution was $80,000. As a result of the distribution, what is Suzy's basis in the inventory and land, and how much gain or loss does she recognize?

• A) $0 basis in inventory; $25,000 basis in land; $0 gain or loss.
• B) $16,000 basis in inventory; $34,000 basis in land; $0 gain or loss.
• C) $16,000 basis in inventory; $25,000 basis in land; $9,000 loss.
• D) $18,000 basis in inventory; $32,000 basis in land; $0 gain or loss.
• E) $16,000 basis in inventory; $25,000 basis in land; $39,000 loss..

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Definitions:

Deceptive Pricing

A misleading business practice where the price advertised is not fully transparent, leading consumers to believe they are paying less than the actual cost.

Price Discrimination

A pricing strategy where a company charges different prices for the same product or service based on various criteria like customer location, purchasing power, or quantity bought.

Vertical Price Fixing

An agreement among participants on different levels of the same supply chain to control prices passed on to consumers.

Tying Arrangement

A business agreement in which the sale of one product or service is linked to the purchase of an additional product or service.