Amy and Mitchell share equally in the profits, losses, and capital of the accrual basis AM Products LLC. Amy is the managing member of the LLC (treated as a general partner) and is a U.S. citizen. At the beginning of the current tax year, Amy's capital account has a balance of $300,000, and the LLC has recourse debts of $200,000 payable to unrelated parties. All partnership recourse debt is shared equally between the partners.
The following information about AM's operations for the current year is obtained from the entity's records.
Ordinary income ................................................ $400,000
Interest income from P&G bond .................................. 4,000
Long-term capital loss .............................................. 6,000
Short-term capital gain ............................................. 12,000
Charitable contribution ............................................. 4,000
Cash distribution to Amy .......................................... 20,000
Year-end LLC debt payable to unrelated parties is $140,000. If all transactions are reflected in her beginning capital and basis in the same manner:
a. What is Amy's basis in her LLC interest at the beginning of the year?
b. What is Amy's basis in her LLC interest at the end of the current year?