Calculating Capital Gain on Sale of LLC Interest
Explanation:
Capital Gain Calculation:
Capital gain on sale = Sales of interest by Yong - Basis of Yong in the LLC interest
Sales of interest by Yong: $17,500
Less Basis of Yong in the LLC interest: $11,000
Gain: $6,500
Therefore, Yong recognized a capital gain of $6,500 because he sold his 10% interest in Catawissa LLC to Mei for $17,500. His basis in the LLC interest was $11,000, resulting in a capital gain of $6,500.