$120,000 (instead of $250,000), how much, if any, gain would she recognize on the sale? How would the gain be characterized? Return Problems 1. Ryan Ross (111-1- Oscar Omega (222-22-2222), Clark Carey 333-33-3333), and Kim Kardigan (444-44-4444) are equal active members in ROCK the Ages LLC. ROCK serves as agents and managers for prominent musicians in the Los Angeles area. The LLC's Federal ID number is 55-5555555. It uses the cash basis and the cal- endar year and began operations on January 1, 2003. Its current address is 6102 Wil- shire Boulevard, Suite 2100, Los Angeles, CA 90036. ROCK was the force behind such music icons as Rhiannon, Elena Gomez, Tyler Quick, and Conjuring Dragons and has had a very profitable year. The following information was taken from the LLC's income statement for the current year Fees and commissions Taxable interest income from bank deposits Tax-exempt interest Net gain on stock sales 1,600 4,000 $4,808.800 Total revenues 380,000 Advertising and public relations Charitable contributions Section 179 expense Employee salaries and wages Guaranteed payment (services), Ryan Ross, office 1,000,000 Guaranteed payment (services), other members Entertainment, subject to 50% disallowance Travel Legal and accounting fees Office rentals paid Interest expense on operating line of credit 132,000 10,000 Office expense Payroll taxes 92,000 Total expenses $3,968.800 During the past couple of years, ROCK has taken advantage of bonus depreciation and 179 deductions and fully remodeled the premises and upgraded its leasehold improvements. This year, ROCK wrapped up its remodel with the purchase of $20,000 of office furniture for which it will claim a 179 deduction. (For simplicity assume that ROCK uses the same cost recovery methods for both tax and financial purposes.) There is no depreciation adjustment for altermative minimum tax purposes. $120,000 (instead of $250,000), how much, if any, gain would she recognize on the sale? How would the gain be characterized? Return Problems 1. Ryan Ross (111-1- Oscar Omega (222-22-2222), Clark Carey 333-33-3333), and Kim Kardigan (444-44-4444) are equal active members in ROCK the Ages LLC. ROCK serves as agents and managers for prominent musicians in the Los Angeles area. The LLC's Federal ID number is 55-5555555. It uses the cash basis and the cal- endar year and began operations on January 1, 2003. Its current address is 6102 Wil- shire Boulevard, Suite 2100, Los Angeles, CA 90036. ROCK was the force behind such music icons as Rhiannon, Elena Gomez, Tyler Quick, and Conjuring Dragons and has had a very profitable year. The following information was taken from the LLC's income statement for the current year Fees and commissions Taxable interest income from bank deposits Tax-exempt interest Net gain on stock sales 1,600 4,000 $4,808.800 Total revenues 380,000 Advertising and public relations Charitable contributions Section 179 expense Employee salaries and wages Guaranteed payment (services), Ryan Ross, office 1,000,000 Guaranteed payment (services), other members Entertainment, subject to 50% disallowance Travel Legal and accounting fees Office rentals paid Interest expense on operating line of credit 132,000 10,000 Office expense Payroll taxes 92,000 Total expenses $3,968.800 During the past couple of years, ROCK has taken advantage of bonus depreciation and 179 deductions and fully remodeled the premises and upgraded its leasehold improvements. This year, ROCK wrapped up its remodel with the purchase of $20,000 of office furniture for which it will claim a 179 deduction. (For simplicity assume that ROCK uses the same cost recovery methods for both tax and financial purposes.) There is no depreciation adjustment for altermative minimum tax purposes