Amy and Mitchell share equally in the profits, losses, and capital of the accrual basis AM Products LLC 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, Amys capital account has a balance of $300,000, and the LLC has debts of $200,000 payable to unrelated parties The debts are recourse to the LLC, but neither of the LLC members has personally guaranteed them Assume that all LLC debt is shared equally between the partners The following information about AMs operations for the current year is obtained from the LLCs records Ordinary income $ 900,000 W2 wages to employees 200,000 Depreciation expense 300,000 Interest income 4,000 Long term capital loss 6,000 Long term capital gain 12,000 Charitable contribution (cash) 4,000 Cash distribution to Amy 20,000 Unadjusted basis of partnership depreciable property 1,600,000 Year end LLC debt payable to unrelated parties is $140,000 Assume that all transactions are reflected in Amys beginning capital and basis in the same manner Also assume that all AM Products activities are eligible for the qualified business income deduction, and that the unadjusted basis of assets immediately after acquisition was $800,000 Use Microsoft Excel to calculate Amys basis in her LLC interest at the beginning and end of the tax year What income, gains, losses, and deductions does Amy report on her income tax return Based on the information provided, what other calculations is Amy required to make Use Microsoft Excel to prepare Amys 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 basis as calculated in part (a) DO NOT NEED TO USE EXCEL

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 19, 2024

Amy and Mitchell share equally in the profits, losses, and capital of the accrual basis AM Products LLC. Amy is a managing member of the

Amy and Mitchell share equally in the profits, losses, and capital of the accrual basis AM Products LLC. 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, Amys capital account has a balance of $300,000, and the LLC has debts of $200,000 payable to unrelated parties. The debts are recourse to the LLC, but neither of the LLC members has personally guaranteed them. Assume that all LLC debt is shared equally between the partners. The following information about AMs operations for the current year is obtained from the LLCs records.

Ordinary income	$ 900,000
W2 wages to employees	200,000
Depreciation expense	300,000
Interest income	4,000
Long-term capital loss	6,000
Long-term capital gain	12,000
Charitable contribution (cash)	4,000
Cash distribution to Amy	20,000
Unadjusted basis of partnership depreciable property	1,600,000

Year-end LLC debt payable to unrelated parties is $140,000. Assume that all transactions are reflected in Amys beginning capital and basis in the same manner. Also assume that all AM Products activities are eligible for the qualified business income deduction, and that the unadjusted basis of assets immediately after acquisition was $800,000.

Use Microsoft Excel to calculate Amys basis in her LLC interest at the beginning and end of the tax year.
What income, gains, losses, and deductions does Amy report on her income tax return?
Based on the information provided, what other calculations is Amy required to make?
Use Microsoft Excel to prepare Amys 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 basis as calculated in part (a)?

*DO NOT NEED TO USE EXCEL*