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  3. cole originally contributed $50,000 in cash for a

Cole originally contributed $50,000 in cash for a one-third interest in the CDE LLC. During...

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Accounting

Cole originally contributed $50,000 in cash for a one-third interest in the CDE LLC. During the time Cole was a member of the LLC, his share of the LLCs income was $90,000 and he withdrew $60,000 cash. Coles capital account balance (determined using the tax method) is now $80,000, and the LLCs liabilities are $45,000, of which Coles share is $15,000. Coles outside basis is $95,000 ($80,000 capital account + $15,000 share of the LLCs debts).

Cole sells his LLC interest to Stephanie for $110,000 of cash, with Stephanie also assuming Coles share of the LLCs liabilities. The total amount realized by Cole is $125,000 ($110,000 cash received + $15,000 of the LLCs debts transferred to Stephanie). Coles gain on the sale is $30,000 ($125,000 amount realized $95,000 outside basis).

Stephanies adjusted basis for her LLC interest is the purchase price of $125,000 ($110,000 cash paid + $15,000 assumed LLC debt).

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