Amy and Mitchell share equally in the profits, losses, and capital of the accrual basis AM Products LLC. The LLC does not need to report financial information to any third parties, so capital accounts are determined using tax rules (rather than GAAP). Amy is a managing member of the LLC (treated as a general partner) and is a U.S. person. At the beginning of the current tax year, Amy's capital account has a balance of $692,000, and the LLC has debts of $449,800 payable to unrelated parties. The debts are recourse to the LLC, but neither of the LLC members has personally guaranteed them. Assume that all LLC debt is shared equally between the partners. The following information about AM's operations for the current year is obtained from the LLC's records. Operating income* $1,038,000 w-2 wages 200,000 Depreciation expense 300,000 Interest income 10,380 Long-term capital loss 6,920 Long-term capital gain 20,760 Charitable contribution (cash) 10,430 Cash distribution to Amy 51,900 Unadjusted basis of partnership depreciable property immediately after acquisition 1,600,000 Operating income equals revenue less operating expenses (other than expenses listed separately above). Year-end LLC debt payable to unrelated parties is $314,860. Assume that all transactions are reflected in Amy's beginning capital and basis in the same manner. Also assume that all AM Products' activities are eligible for the qualified business income deduction. a. Calculate Amy's basis in her LLC interest at the beginning and end of the tax year. Use her capital account as a starting point. LLC interest at the beginning of the year: LLC interest at the end of the year: $ b. What income, gains, losses, and deductions does Amy report on her income tax return? If an amount is zero, enter "0". Ordinary income Net long-term capital gain Interest income Charitable contribution deduction Cash distribution
Amy and Mitchell share equally in the profits, losses, and capital of the accrual basis AM Products LLC. The LLC does not need to report financial information to any third parties, so capital accounts are determined using tax rules (rather than GAAP). Amy is a managing member of the LLC (treated as a general partner) and is a U.S. person. At the beginning of the current tax year, Amy's capital account has a balance of $692,000, and the LLC has debts of $449,800 payable to unrelated parties. The debts are recourse to the LLC, but neither of the LLC members has personally guaranteed them. Assume that all LLC debt is shared equally between the partners. The following information about AM's operations for the current year is obtained from the LLC's records. Operating income* $1,038,000 w-2 wages 200,000 Depreciation expense 300,000 Interest income 10,380 Long-term capital loss 6,920 Long-term capital gain 20,760 Charitable contribution (cash) 10,430 Cash distribution to Amy 51,900 Unadjusted basis of partnership depreciable property immediately after acquisition 1,600,000 Operating income equals revenue less operating expenses (other than expenses listed separately above). Year-end LLC debt payable to unrelated parties is $314,860. Assume that all transactions are reflected in Amy's beginning capital and basis in the same manner. Also assume that all AM Products' activities are eligible for the qualified business income deduction. a. Calculate Amy's basis in her LLC interest at the beginning and end of the tax year. Use her capital account as a starting point. LLC interest at the beginning of the year: LLC interest at the end of the year: $ b. What income, gains, losses, and deductions does Amy report on her income tax return? If an amount is zero, enter "0". Ordinary income Net long-term capital gain Interest income Charitable contribution deduction Cash distribution
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter14: Partnerships And Limited Liability Entities
Section: Chapter Questions
Problem 16P
Related questions
Question
Please, look at the two images attached.
Transcribed Image Text:b. What income, gains, losses, and deductions does Amy report on her income tax return?
If an amount is zero, enter "0".
Ordinary income
Net long-term capital gain
Interest income
Charitable contribution deduction
Cash distribution
c. Based on the information provided, what other calculations is Amy required to make?
Amy may be eligible to deduct up to
% of the ordinary income as qualified business income under 5 199A, and will make
that calculation on her return. This deduction
require a cash outflow by Amy or the LLC, and it
affect her basis or capital account. As someone treated as a general partner, Amy's distributive share of the LLC's ordinary business income
from the LLC may
subject to self-employment tax and possibly the additional Medicare tax. Her
be subject to the additional tax under 5 1411.
d. Prepare Amy's tax basis capital account rollforward from the beginning to the end of the tax year. How does her ending capital account
differ from her ending tax basis in the LLC interest as calculated in part (a)?
Capital account balance, beginning
year
Ordinary income
Interest income
Net long-term capital gain
Less:
Charitable contribution
Cash distribution to Amy
Capital account balance, end of
year
Amy's capital account differs from her basis only by the amount of her share of LLC
Transcribed Image Text:Problem 14-16 (Algorithmic) (LO. 4, 5, 7)
Amy and Mitchell share equally in the profits, losses, and capital of the accrual basis AM Products LLC. The LLC does not need to report
financial information to any third parties, so capital accounts are determined using tax rules (rather than GAAP). Amy is a managing
member of the LLC (treated as a general partner) and is a U.S. person.
At the beginning of the current tax year, Amy's capital account has a balance of $692,000, and the LLC has debts of $449,800 payable to
unrelated parties. The debts are recourse to the LLC, but neither of the LLC members has personally guaranteed them. Assume that all LLC
debt is shared equally between the partners. The following information about AM's operations for the current year is obtained from the
LLC's records.
Operating income*
$1,038,000
W-2 wages
200,000
Depreciation expense
300,000
Interest income
10,380
Long-term capital loss
6,920
Long-term capital gain
20,760
Charitable contribution (cash)
10,430
Cash distribution to Amy
51,900
Unadjusted basis of partnership
depreciable property immediately after
1,600,000
acquisition
Operating income equals revenue less operating expenses (other than expenses listed separately above).
Year-end LLC debt payable to unrelated parties is $314,860. Assume that all transactions are reflected in Amy's beginning capital and basis
in the same manner. Also assume that all AM Products' activities are eligible for the qualified business income deduction.
a. Calculate Amy's basis in her LLC interest at the beginning and end of the tax year. Use her capital account as a starting point.
Xe:
LLC interest at the beginning of the year:
LLC interest at the end of the year: $
b. What income, gains, losses, and deductions does Amy report on her income tax return?
If an amount is zero, enter "0".
Ordinary income
Net long-term capital gain
Interest income
Charitable contribution deduction
Cash distribution
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