In a Proportionate Liquidating Distribution of His 40% Interest in the RST

question 18

Essay

In a proportionate liquidating distribution of his 40% interest in the RST LLC, Stuart received cash ($100,000), land (basis of $60,000 and value of $90,000), and unrealized receivables (basis of $0 and value of $40,000). In addition, Stuart is relieved of his $80,000 share of the LLC's liabilities. Stuart's basis in RST (including his share of LLC liabilities) was $200,000 immediately prior to this distribution.
a. How much gain or loss does Stuart recognize on this distribution?
b. What is Stuart's basis in the receivables and land he receives in the distribution?

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Definitions:

Psychosocial Development

A theory proposed by Erik Erikson that describes how individuals evolve through various stages of social and psychological development from infancy to adulthood.

Erikson

Refers to Erik Erikson, a developmental psychologist known for his theory on the psychosocial development of human beings.

Industry Versus Inferiority

A stage in Erik Erikson's theory of psychosocial development where children develop a sense of competence through mastering tasks.

Psychosocial Stages

A theory proposed by Erik Erikson, which posits that individuals go through eight developmental stages, each involving a specific conflict that must be resolved.