It should not be expected to cover, at least not completely, the disproportionate distributions of marketable securities that may occur when a pick and choose approach is taken to distributing LLC assets to the owners in liquidation.
Such transfers are common in family LLCs and not uncommon in other LLCs.
As a result, if property has been contributed to the LLC within seven years of the planned liquidation, the owners should take care to identify any built-in gain and to consider distributing any such contributed property in the liquidation to the contributing owner.
In the alternative, the owners should consider the limited exception available for liquidating distributions in which the contributing owner receives an interest in the contributed property (and no other property).
Does it seem time to split things up and let each owner go his or her own way with a share of the LLC’s property?
If so, it may be time to dissolve and liquidate the company and distribute its assets to its owners.