Nicholas Is a 25% Owner in the DDBN LLC (A

question 57

Multiple Choice

Nicholas is a 25% owner in the DDBN LLC (a calendar year entity) .At the end of the last tax year, Nicholas's basis in his interest was $50,000, including his $20,000 share of LLC liabilities.On July 1 of the current tax year, Nicholas sells his LLC interest to Anna for $80,000 cash.In addition, Anna assumes Nicholas's share of LLC liabilities, which, at that date, was $15,000.During the current tax year, DDBN's taxable income is $120,000 (earned evenly during the year) .Nicholas's share of the LLC's unrealized receivables is valued at $6,000 ($0 basis) .At the sale date, what is Nicholas's basis in his LLC interest, how much gain or loss must he recognize, and what is the character of the gain or loss?

• A)$45,000 basis; $6,000 ordinary income; $44,000 capital gain.
• B)$60,000 basis; $6,000 ordinary income; $29,000 capital gain.
• C)$60,000 basis; $35,000 capital gain.
• D)$75,000 basis; $0 ordinary income; $20,000 capital gain.
• E)$75,000 basis; $6,000 ordinary income; $14,000 capital gain.

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Definitions:

Private Self-consciousness

An individual's tendency to focus on inner thoughts, feelings, and experiences, leading to a heightened awareness of self.

Alcohol Preferences

An individual's specific liking or choice for certain types of alcoholic beverages over others, which can be influenced by cultural, social, and personal factors.

Ought Self

A component of self-concept based on how individuals believe they should behave or be, driven by societal, cultural, or personal standards and obligations.

Ideal Self

A person's conception of how they would like to be, embodying their aspirations and goals.