Styling Shoes, LLC Filed Its 20X8 Form 1065 on March

question 76

Multiple Choice

Styling Shoes, LLC filed its 20X8 Form 1065 on March 15, 20X9. Styling had three members with the following ownership interests and tax basis at the beginning of the 20X8:
(1) Jane, a member with a 25% profits and capital interest and a $5,000 outside basis, (2) Joe, a member with a 45% profits and capital interest and a $10,000 outside basis, and (3) Jack, a member with a 30% profits and capital interest and a $2,000 outside basis. The following items were reported on Styling's Schedule K for the year: ordinary income of $100,000, Section 1231 gain of $15,000, charitable contributions of $25,000, and tax-exempt income of $3,000. In addition, Styling received an additional bank loan of $12,000 during 20X8. What is Jane's tax basis after adjustment for her share of these items?

• A) $28,250.
• B) $31,250.
• C) $33,500.
• D) $57,250.

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Definitions:

Implied-in-Fact Contract

An agreement created by the actions or circumstances of the parties involved rather than by written or spoken words.

Gambling Illegal

The prohibition by law of the practice or act of wagering, betting, or playing games of chance for money or other stakes.

Exculpatory Clause

A contract provision that releases one party from liability or legal consequences of their actions to another party involved.

Release

In legal terms, an agreement where one party frees another from liability, claims, or demands.