Only need Parts C, D, & E!!
Problem 21-41 (C) (LO. 7, 9, 10) Seeley and Swan share equally in the profits, losses, and capital of the accrual basis SS LLC. SS Products LLC. Seeley 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, Seeley's capital account has a balance of $815,000 and the LLC has debts of $192,000 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 recourse debt is shared equally between the partners. The following information about SS's operations for the current year is obtained from the LLC's records: Ordinary income Interest income Short-term capital loss $1,400,000 42,000 16,000 59,000 12,000 62,000 Long-term capital gain Charitable contribution Cash distribution to Seeley Year-end LLC debt payable to unrelated parties is $120,000. Assume all transactions are reflected in her beginning capital and basis in the same manner. What is Seeley's basis in her LLC interest: a. Seeley's basis in the LLC interest at the beginning of the year is $ 911,000 . Feedback Check My Work A partner's basis in the LLC interest is important for determining the treatment of distributions from the LLC to the partner, establishing the deductibility of LLC losses, and calculating gain or loss on the partner's disposition of the LLC interest. After the partner is admitted to the LLC, the partner's basis is adjusted for numerous items. b. Seeley's basis in the LLC interest at the end of the year is $ 1,549,500 Feedback Check My Work Correct c. What income, gains, losses, and deductions does Seeley report on her income tax return? If an amount is zero, enter "0". Ordinary income A Net long-term capital gain A Interest income A Charitable contribution deduction A Cash distribution Feedback Check My Work Incorrect d. Based on the information provided, what other calculations is Seeley required to make? Seeley may be eligible to deduct up to % of the ordinary income as qualified business income under 199A, and will make that calculation on her return. This deduction require a cash outflow by Seeley or the LLC, and it affect her basis or capital account. As someone treated as a general partner, Seeley's distributive share of the LLC's ordinary business income subject to self-employment tax and possibly the additional Medicare tax. Her from the LLC may be subject to the additional tax under 1411. Feedback Check My Work Incorrect e. Prepare Seeley's 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)? Capital account balance, beginning year Ordinary income Interest income Net long-term capital gain Less: Charitable contribution Cash distribution to Seeley Capital account balance, end of year Seeley's capital account differs from her basis only by the amount of her share of LLC
