27. Sweeney originally contributed $175,000 in cash for a one-fourth interest in the Gilbert LLC. During the several years that Sweeney was a member of the LLC, his share of the LLC’s income was $90,000 and he withdrew $75,000 cash. The LLC’s liabilities are $80,000, of which Sweeney’s share is $20,000. The LLC has $40,000 of hot assets, of which Sweeney’s share is $10,000.
Sweeney sells his LLC interest to Jana for $225,000 cash, with Jana assuming Sweeney’s share of the LLC’s liabilities.
How much is Sweeney’s gain on the sale, and what is its character? How much is Jana’s adjusted basis for her LLC interest?
My answer.
Sweeny’s gain on sale is a 125,000 and it is a capital gain.
Jana’s adjusted basis is 225,000 for her LLC Interest.
Please advise.