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19 September, 07:07

Tom is talking to his friend Bob, who has an interest in Freedom, LLC, about purchasing his LLC interest. Bob's outside basis in Freedom, LLC is $13,000. This includes his $3,100 one-fourth share of the LLC's debt. Bob's 704 (b) capital account is $20,000. If Tom bought Bob's LLC interest for $23,000, what would Tom's outside basis be in Freedom, LLC?

A. 23,000

B. 26,100

C. 19,900

D. 13,000

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Answers (1)
  1. 19 September, 07:36
    0
    Option B is correct.

    Tom's outside basis be in Freedom, LLC=$26,100

    Explanation:

    Option B is correct.

    Amount Paid by Tom for buying Bob's LLC interest=$23,000

    Tom's Share of LLC debt = $3,100

    Tom's outside basis be in Freedom, LLC = Amount Paid by Tom for buying Bob's LLC interest + Tom's Share of LLC debt

    Tom's outside basis be in Freedom, LLC = $23,000+$3,100

    Tom's outside basis be in Freedom, LLC=$26,100
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Home » Business » Tom is talking to his friend Bob, who has an interest in Freedom, LLC, about purchasing his LLC interest. Bob's outside basis in Freedom, LLC is $13,000. This includes his $3,100 one-fourth share of the LLC's debt.
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