Cynthia's Basis in Her LLC Interest Was $60,000, Including Her

True/False

Cynthia's basis in her LLC interest was $60,000, including her $40,000 share of the LLC's debt. In a proportionate liquidating distribution in which the LLC also liquidates, Cynthia receives cash of $50,000, and inventory with a basis of $3,000 and a fair market value of $5,000. Before the partnership liquidates, it repays all of its liabilities. Cynthia recognizes a gain of $30,000 on the distribution and takes a basis of $0 in the inventory.