Al, Terry, and Sherri formed the Excell LLC at the beginning of the current year. Al and Terry each contributed $200,000 and Sherri transferred several acres of agricultural land she had purchased two years earlier to the LLC. The land had a tax basis of $50,000 and was appraised at $300,000. The land was also encumbered with a $100,000 nonrecourse mortgage (i.e., qualified nonrecourse financing) for which no one was personally liable. The members plan to use the land and cash to begin a cattle-feeding operation. Sherri will work full-time operating the business, but Al and Terry will devote less than two days per year to the operation. All three members agree to split profits and losses equally. At the end of the first year, Excell had accumulated $40,000 of accounts payable jointly guaranteed by Al and Terry and had made a $9,000 principal payment on the mortgage. None of the members have passive income from other sources. For the first year of operations, the partnership records disclosed the following information (next page):

Sales revenue $620,000 Cost of goods sold $380,000 Operating expenses $670,000 Dividends $1,200 Municipal bond interest $300 Salary paid as a guaranteed payment to Sherri (not included in expenses) $10,000 Cash distributions split equally among the members at year-end $3,000

f. List the separate items of partnership income, gains, losses, deductions and other items that will be included in each members Schedule K-1 for the first year of operations. Use the proposed self-employment tax regulations to determine each members self-employment income or loss. g. What are the members adjusted bases in their LLC interests at the end of the first year of operations? h. What are the members at-risk amounts in their LLC interests at the end of the first year of operations? i. How much loss from Excell, if any, will the members be able to deduct on their individual returns from the first year of operations?