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Erica and Brett decide to form their new motorcycle business as a LLC. Each will receive an equal profits (loss) interest by contributing cash,...
30. Erica and Brett decide to form their new motorcycle business as a LLC. Each will receive an equal profits(loss) interest by contributing cash, property, or both. In addition to the members' contributions, theirLLC will obtain a $50,000 nonrecourse loan from First Bank at the time it is formed. Brett contributescash of $5,000 and a building he bought as a storefront for the motorcycles. The building has a FMV of$45,000, an adjusted basis of $30,000, and is secured by a $35,000 nonrecourse mortgage that the LLCwill assume. What is Brett's outside tax basis in his LLC interest?A. $37,500B. $40,000C. $42,500D. $45,000
