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.

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Definitions:

Deinstitutionalization

Process of closing large asylums and integrating people back into the community where they can be treated locally.

Electroshock

Also known as electroconvulsive therapy (ECT), it is a psychiatric treatment in which seizures are electrically induced in patients to provide relief from mental disorders.

Electroconvulsive Therapy

A psychiatric treatment involving electrically induced seizures to provide relief from severe mental disorders, notably major depression.

Transference

The projection of one's feelings, desires, and expectations from one person to another, often experienced in therapeutic contexts.