ABC Company, a limited liability company (LLC) organized in the state of Florida, reports using a calendar tax year-end. The LLC chooses to be taxed as a partnership. Alex, Bob, and Carrie (all calendar year taxpayers) own ABC equally, and each has a basis of $40,000 in his or her ABC interest on the first day of the current tax year. ABC has the following results for the current year’s operation:
Operating income ……………………… $30,000
Short-term capital gain ………………… 12,000
Long-term capital loss …………………. 6,000
Each owner received a $12,000 cash distribution during the current year.
a. What are the amount and character of the income, gain, and loss Alex must report on his tax return as a result of ABC’s operations?
b. What is Alex’s basis in his ownership interest in ABC after the current year’s operations?