Amy and Mitchell share equally (50%) in the profits, losses, and capital of the accrual basis AM Products LLC. The LLC does not need to report financial information to any third parties, so capital accounts are determined using tax rules (rather than GAAP). Amy is a managing member of the LLC (treated as a general partner) and is a U.S. person. At the beginning of the current tax year, Amy's capital account has a balance of $676,000, and the LLC has debts of $439,400 payable to unrelated parties. All debts are recourse to the LLC, but neither of the LLC members has personally guaranteed them. The following information about AM's operations for the current year is obtained from the LLC's records. Operating income $1,014,000 W-2 wages 200,000 Depreciation expense 300,000 Interest income 10,140 6,760 20,280 10,190 Long-term capital loss Long-term capital gain Charitable contribution (cash) Cash distribution to Amy Unadjusted basis of partnership property immediately after acquisition 50,700 1,600,000 Operating income equals revenue less operating expenses (other than expenses listed separately above). Year-end LLC debt payable to unrelated parties is $307,580. Assume that all transactions are reflected in her beginning tax basis in the LLC inbeginning capital and basis in the same manner. Also assume that all AM Products' activities are eligible for the qualified business income deduction. a. Calculate Amy's basis in her LLC interest at the beginning and end of the tax year. Use her capital account as a starting point. LLC interest at the beginning of the year: 696,000 x LLC interest at the end of the year: s 452,400 x. Feedback b. What income, gains, losses, and deductions does Amy report on her income tax return? If an amount is zero, enter "O". Ordinary income 696,000 x Net long-term capital gain $ Interest income Charitable contribution deduction Cash distribution Feedback C. Based on the information provided, what other calculations is Amy required to make? Amy may be eligible to deduct up to 30 X % of the ordinary income as qualified business income under $ 199A and will make C. Based on the information provided, what other calculations is Amy required to make? Amy may be eligible to deduct up to 30 X % of the ordinary income as qualified business income under 3 1994 and will make that calculation on her return. This deduction does not require a cash outflow by Amy or the LLC, and it does not affect her basis or capital account. As someone treated as a general partner, Amy's distributive share of the LLC's ordinary business income is subject to self-employment tax and possibly the additional Medicare tax. Her net investment income from the LLC may be subject to the additional tax under $ 1411. Feedback d. Prepare Amy's tax basis capital account rollforward from the beginning to the end of the tax year. How does her ending capital account differ from her ending tax basis in the LLC interests as calculated in part (a)? Capital account balance, beginning 696,000 x year Ordinary income 234,900 x Interest income 5,220 x Net long-term capital gain 6,960 x Less: Less: Charitable contribution . 5,245 X Cash distribution to Amy 52,200 x 158,340 x Capital account balance, end of year 1,043,975 x Amy's capital account differs from her basis only by the amount of her share of LLC liabilities Feedback e. Using the information from parts (a) to (d), prepare Amy's Schedule K-1 as if you were the preparer of AM Products LLC's tax return. Provide all information that Amy needs to the extent you can. Enter all amounts as positive numbers. Schedule K-1 (Form 1065) 2020 651119 Final K-1 Amended K-1 OMB No. 1545-0123 Part III Partner's Share of Current Year Income, Deductions, Credits, and Other Items 1 Ordinary business income 15 Credits (loss) Department of the Treasury Internal Revenue Service For calendar year 2020, or tax year 15 Credits Department of the Treasury Internal Revenue Service For calendar year 2020, or tax year 1 Ordinary business income (loss) beginning / / 2020 ending / / 2 Net rental real estate income (loss) Partner's Share of Income, Deductions, Credits, etc. See separate instructions. Part I Information About the Partnership 3 Other net rental income (loss) 16 Foreign transactions A Partnership's employer identification number 4a Guaranteed payments for services B B Partnership's name, address, city, state, and ZIP code AM Products, LLC 4b Guaranteed payments for capital IRS Center where partnership filed return 4c Total guaranteed payments D - Check if this is a publicly traded partnership (PTP) 5 Interest income Part II Information About the Partner E Partner's SSN or TIN (Do not use TIN of a disregarded entity. See inst.) 6a Ordinary dividends 6b Qualified dividends F Name, address, city, state, and ZIP code for partner entered in E. See instructions. 6c Dividend equivalents 17 Alternative minimum tax A. 7 Royalties G 8 General partner or LLC member- Limited partner or other LLC manager member H1 Domestic partner Foreign partner H2 - If the partner is a disregarded entity (DE), enter the partner's: Name Net short-term capital gain (loss) 9a Net long-term capital gain (loss) TIN 18 Tax-exempt income and nondeductible expenses 11 What type of entity is this partner? Individual . 12 If this partner is a retirement plan (IRA/SEP/Keogh/etc.), check here a 9b Collectibles (28%) gain (loss) 9c Unrecaptured section 1250 gain 10 Net section 1231 gain (loss) Partner's share of profit, loss, and capital (see instructions): Beginning Ending Profit 11 Other income (loss) 19 Distributions % % Loss % % Capital % Check if decrease is due to sale or exchange of partnership interest - 12 Section 179 deduction 20 Other information A 13 Other deductions A z* STMT QBI K Partner's share of liabilities: Reninninn Endinn 13 Other deductions Z* STMT A QBI K Partner's share of liabilities: Beginning Ending W-2 wages Nonrecourse $ 5 111 UBIA Qualified nonrecourse $ financing Recourse $ - Check this box if Item Kincludes liability amounts from lower tier partnerships. 14 Self-employment earnings (loss) A $ S Partner's capital account analysis: Beginning capital account. .... Capital contributed during the year. . Current year net income (loss).... Other increase (decrease) (attach explanation) 21 - More than one activity for at-risk purposes* 22 - More than one activity for passive activity purposes* *See attached statement for additional information. $ VI Withdrawals & distributions .... $ LOCE Ending capital account. $