Ha liquidating trust
R first reduces his ,000 outside basis by the ,000 cash distribution.His remaining ,000 of basis in his LLC interest becomes his basis in the distributed real property (Sec. Z does not recognize any gain on the distribution although the FMV of the property R receives (,000) exceeds its ,000 Example 2.
737); or (4) the distribution is part of a disguised sale (see Sec. A loss may be recognized upon a distribution in liquidation of a member's interest if no property other than cash, unrealized receivables, and inventory is received. Nontaxable liquidating distribution of cash and property: Z LLC is liquidating. To liquidate his interest, Z distributes to R ,000 cash plus real property with a ,000 FMV.A retail business might use a self-liquidating loan to purchase extra inventory in anticipation of the holiday shopping season.The revenue generated from selling that inventory would then be used to repay the loan.However, basis should not be allocated in excess of(f)(2)). 704(c)(1)(C) basis adjustment is not reallocated to the distributed property, and the remainder is treated as a positive Sec. If the distribution also gives rise to a negative Sec. 754 election in effect at the time of the liquidating distribution, it is treated as having made a Sec.The proposed regulations provide that if a member with a Sec. 704(c)(1)(C) member) receives a distribution of property (whether or not the property is Sec. 704(c)(1)(C) property retained by the LLC to distributed properties of like character under the principles of Regs. 734(b) adjustment, then the negative adjustment and the Sec. 754 election solely for purposes of computing any negative Sec.