Question

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 $10,500. This includes his $2,600 one-fourth share of the LLC's debt. Bob's 704(b) capital account is $17,500. If Tom bought Bob's LLC interest for $18,000, what would Tom's outside basis be in Freedom, LLC

Answer 1

$20,600

Step-by-step explanation:

The computation of the Tom's outside basis be in Freedom, LLC is shown below:

Tom's outside basis be in Freedom, LLC = Amount paid for interest + share of LLC’s Debt

= $18,000 + $2,600

= $20,600

We simply added the amount paid for interest and the share of debt so that the outside basis amount could come

Therefore, all the other information is not relevant. Hence, ignored it