Question: Advanced Taxation.
1. In a proportionate nonliquidating distribution of her 30% interest in Justice League LLC, Diana Prince received cash ($90,000), land (basis of $15,000 and value of $75,000), and unrealized receivables (basis of $0 and value of $22,000). In addition, Diana is relieved of her $80,000 share of the LLC's liabilities. Diana's basis in Justice League (including her share of LLC liabilities) was $100,000 immediately prior to this distribution.
a. How much gain or loss must Diana recognize?
b. What is Diana's basis in each of the assets received in the distribution?
c. What is Diana's outside basis in the LLC interest following liquidation of her interest? Any gain or loss recognized on the liquidation of her interest? Why or why not?