The BLM LLC's Balance Sheet on August 31 of the Current

Multiple Choice

The BLM LLC's balance sheet on August 31 of the current year is as follows. $\begin{array}{lrr}&\text { Adjusted } \\&\text { Basis }&\text { F M V } \\ \text { Cash } & \$ 60,000 & \$ 60,000 \\\text { Receivables } & -0- & 150,000 \\\text { Capital assets } & 90,000 & 300,000 \\& \underline{\mathbf{\$ 1 5 0 , 0 0 0}} &\underline{ \mathbf{\$ 5 1 0 , 0 0 0}} \\\\\text { Nonrecourse debt } & \$ 90,000 & \$ 90,000 \\\text { Barney, capital } & 20,000 & 140,000 \\\text { Lillie, capital } & 20,000 & 140,000 \\\text { Marshall, capital } & 20,000 & \underline{140,000} \\& \mathbf{\$ 1 5 0 , 0 0 0} & \mathbf{\$ 5 1 0 , 0 0 0}\end{array}$
The nonrecourse debt is shared equally among the LLC members. On that date, Lillie sells her one-third interest to Robyn for $170,000, including cash and relief of Lillie's share of the nonrecourse debt. Lillie's outside basis for her interest in the LLC is $50,000, including her share of the LLC's debt. How much capital gain and/or ordinary income will Lillie recognize on the sale?

A) $100,000 capital gain; $50,000 ordinary income.
B) $120,000 capital gain; $0 ordinary income.
C) $150,000 capital gain; $0 ordinary income.
D) $70,000 capital gain; $50,000 ordinary income.
E) None of the above.