2. Explain the requirements for the termination of a business test for purposes of a partial liquidation. Why is this test generally pre ferable over the genuine contraction of a corporate business test for qualifying a distribution as a partial liquidation? 3. In the current year, the HILL LLC received revenues of $200,000 and paid the following amounts: $50,000 of business expenses (rent, utilities, wages, depreciation, etc.), a $40,000 guaranteed payment (for services) to 50% member Jerry, $10,000 to member Ethan for consulting services, and $10,000 as a distribution to member Olivia. In addition, the LLC earned $2,000 of tax-exempt interest income during the year. Jerry is the managing member of the LLC. Jerry's basis in his LLC interest was $50,000 at the beginning of the year, and includes a $12,000 share of LLC liabilities. At the end of the year, his share of the LLC's liabilities was $20,000. a. How much income must Jerry report for the tax year and what is the character of the income? b. What is Jerry's basis in his LLC interest at the end of the tax year? c. On what income will Jerry's self-employment tax be calculated? d. What is the maximum amount Jerry might be able to deduct for this business under [section symbol] 199A? What additional information would Jerry need to make this calculation? 4. Jeremy is an active partner who owns a 30% interest in the JS LLP (in which capital is not a material income producing factor). Partnership assets consist of land (fair market value of $200,000, basis of $140,000), accounts receivable (fair market value of $200,000, basis of $0), and cash of $400,000. JS distributes $220,000 of the cash to Jeremy in liquidation of his interest. In addition, Jeremy is relieved of his $40,000 share of the LLP's liabilities. The total payment includes $20,000 for Jeremy's share of JS goodwill (not stated in the partnership agreement). Jeremy's basis in the partnership interest (including his share of the partnership's liabilities) is $120,000 immediately before the distribution. How much gain or loss does Jeremy recognize and what is its character? How much can the partnership deduct? Are any planning opportunities available to the LLP