. At the beginning of the tax year, Leslie\'s basis in LBI LLc was $80,000, incl

Question

. At the beginning of the tax year, Leslie's basis in LBI LLc was $80,000, including Leslie's $30,000 share of the LLC's liabilities. At the end of the year, LBI distributed $10,000 of cash and inventory with a basis of 8,000 and a FMV of $14,000) to Leslie. At the end of the year, LBI had no liabilities or debt.

a. What is the tax effect of the distribution to Leslie & LBI if the distribution is a non-liquidating proportionate distribution? What is Leslie's basis in the inventory and LBI inventory after the distribution?

b. What if it was a proportionate liquiating distribution - would your answer change?

Explanation / Answer

. At the beginning of the tax year, Leslie's basis in LBI LLc was $80,000, incl

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