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.
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.
If any property besides cash, marketable securities, receivables, and inventory is distributed in the liquidating transaction, all loss recognition is deferred until the distributed property is actually sold or If no gain or loss is recognized on a liquidating distribution, the member's aggregate basis in the property received equals the member's basis in his or her LLC interest just before the distribution, reduced by the cash and marketable securities distributed (Sec. Special rules apply where multiple properties are distributed in a liquidating distribution or where the total carryover basis of distributed properties exceeds the member's basis in the LLC.
Basis is assigned to the distributed properties as Step 4: Any basis increase (i.e., the distributee member's basis over and above the LLC's basis in the distributed assets) is then allocated to appreciated assets (other than unrealized receivables and inventory) in proportion to each asset's respective amount of any unrealized appreciation. 704(c)(1)(C) property is retained by the LLC, and no property of like character is distributed, then that property's Sec.
J will recognize no gain or loss on the distribution and will have a basis in the distributed office building of 0,000, the basis of his LLC interest after reduction for the 0,000 of cash received.
V receives only her proportionate share of the inventory, and L has no unrealized receivables.704(c)(1)(C) property) in liquidation of its interest in the LLC, the LLC's adjusted basis in the distributed property immediately before the distribution includes the Sec. 704(c)(1)(C) basis adjustment for the property in which the member relinquished an interest, if any, by reason of the liquidation. 704(c)(1)(C) basis adjustment reallocation are netted, and the net amount is allocated under Regs. 734(b) adjustment that would arise from the Depreciation Methods Available After Liquidating Distribution A member who receives a liquidating distribution of depreciable property acquires a depreciable basis in the property.To the extent the transferee member's basis does not exceed the LLC's predistribution basis, the member assumes the LLC's role and continues to depreciate the property using the remaining life and method used by the LLC (Sec. If the member's basis exceeds the LLC's predistribution basis, the excess is treated as newly acquired property that is placed in service by the distributee at the time of distribution.704(c)(1)(B)); (3) the distribution is within seven years after a contribution of appreciated property (see Sec. He has never contributed property other than cash to the LLC.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.