We have four disregarded LLCs each holding rental properties. These LLCs are owned by a "master" LLC to which we (husband and wife) are partner/members of. Question regards calculating the outside basis for determining gain loss etc.
There is a larger distribution from one of the disregarded LLCs to the Master which then distributed it to the H and W.
In order to determine whether there is positive basis, should you look at the outside basis as a whole combining the basis's of the 4 disregarded entities (which is the outside basis of the members of the Master), or would you look at the outside basis of only the disregarded LLC solely that made the distribution?
In other words H & W are sole members of M LLC. M LLC is sole member of LLC 1, LLC2, LLC3 LLC4
all of which are disregarded. LLC 4 receives large insurance claim monies which will be distributed to M LLC then to H & W. Where is outside basis calculated in this scenario? At the level of LLC 4 or with H & W.