Jamie Owns a 40% Interest in the JSD LLC

question 41

Multiple Choice

Jamie owns a 40% interest in the JSD LLC. In liquidation of the entity, Jamie receives a proportionate distribution of $20,000 cash, inventory (basis of $12,000 and fair market value of $14,000) , and land (basis of $10,000 and fair market value of $30,000) . Jamie's basis in the entity immediately before the distribution was $50,000. As a result of the distribution, what is Jamie's basis in the inventory and land, and how much gain or loss does she recognize?

• A) $0 basis in inventory; $30,000 basis in land; $0 gain or loss.
• B) $12,000 basis in inventory; $18,000 basis in land; $0 gain or loss.
• C) $12,000 basis in inventory; $10,000 basis in land; $8,000 loss.
• D) $14,000 basis in inventory; $30,000 basis in land; $14,000 gain.
• E) $30,000 basis in inventory; $0 basis in land; $0 gain or loss.