Styling Shoes, LLC filed its 20X8 Form 1065 on March 15, 20X9. Styling had three members with the following ownership interests and tax basis at the beginning of the 20X8: (1) Jane, a member with a 25% profits and capital interest and a $9,500 outside basis, (2) Joe, a member with a 45% profits and capital interest and a $14,500 outside basis, and (3) Jack, a member with a 30% profits and capital interest and a $6,500 outside basis. The following items were reported on Styling's Schedule K for the year: ordinary income of $109,000, Section 1231 gain of $19,500, charitable contributions of $29,500, and tax-exempt income of $7,500. In addition, Styling received an additional bank loan of $16,500 during 20X8. What is Jane's tax basis after adjustment for her share of these items?
Answer :
Particulars | Jane | Joe | Jack | |
25% | 45% | 30% | ||
Initial Basis | $9,500 | $14,500 | $6,500 | |
Operating Income | $ 109,000 | $ 27,250 | $ 49,050 | $ 32,700 |
1231 Gain | $ 19,500 | $ 4,875 | $ 8,775 | $ 5,850 |
Tax - Exempt income | $ 7,500 | $ 1,875 | $ 3,375 | $ 2,250 |
Additional debt | $ 16,500 | $ 4,125 | $ 7,425 | $ 4,950 |
Charitable Contribution | ($ 29,500) | ($ 7,375) | ($ 13,275) | ($ 8,850) |
Total | $ 40,250 | $ 69,850 | $ 43,400 |
Jane's tax basis after adjustment is $ 40,250.
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