ghter, operate a local restaurant as an LLC. The MD LLC earned a pro quired by gift from Mona. Assume that capital is a material income-p s of the restaurant without any help from Denise. Reasonable compe ona is s income that can be allocated to Denise is s s old, has no other income, and is claimed as a dependent by Mona. and the remaining income is taxed

SWFT Individual Income Taxes
43rd Edition
ISBN:9780357391365
Author:YOUNG
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Chapter11: Investor Losses
Section: Chapter Questions
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Problem 14-28 (LO. 4, 7)
Mona and Denise, mother and daughter, operate a local restaurant as an LLC. The MD LLC earned a profit of $200,000 in the current year.
Denise's equal LLC interest was acquired by gift from Mona. Assume that capital is a material income-producing factor and that Mona
manages the day-to-day operations of the restaurant without any help from Denise. Reasonable compensation for Mona's services is
$50,000.
a. The MD income allocated to Mona is $
b. The maximum amount of LLC income that can be allocated to Denise is $
c. Assume that Denise is 15 years old, has no other income, and is claimed as a dependent by Mona.
The earned income is taxed
and the remaining income is taxed
Transcribed Image Text:Problem 14-28 (LO. 4, 7) Mona and Denise, mother and daughter, operate a local restaurant as an LLC. The MD LLC earned a profit of $200,000 in the current year. Denise's equal LLC interest was acquired by gift from Mona. Assume that capital is a material income-producing factor and that Mona manages the day-to-day operations of the restaurant without any help from Denise. Reasonable compensation for Mona's services is $50,000. a. The MD income allocated to Mona is $ b. The maximum amount of LLC income that can be allocated to Denise is $ c. Assume that Denise is 15 years old, has no other income, and is claimed as a dependent by Mona. The earned income is taxed and the remaining income is taxed
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