Liquidating a business
L distributes ,000 cash and inventory worth ,000 to V in complete liquidation of her LLC interest.
The inventory has an adjusted basis of ,000 to L.
However, there is a down side to this business, which is purchasing inventory that is difficult to sell regardless of price.
Startup Costs: ,000 - ,000 Part Time: Can be operated part-time. Purchased right and this same inventory can sometimes be bought for as little as five cents on the dollar.
No Every year thousands of retail merchants and corporations across North America go out of business, move, reform, and amalgamate, and often this results in billions of dollars worth of stock and inventory becoming available at bargain basement prices.
Consequently, she is allowed a ,000 capital loss on the liquidation of L (Sec. Note: Gain or loss recognized on a liquidation may also affect the calculation of the member's net gain for purposes of the 3.8% net investment income tax.
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.