Please complete AAA Fast Plumbing's 2020 tax return based upon the facts presented below. If required information is missing, use reasonable assumptions to fill in the gaps. Ignore all AMT calculations and AMT related reporting items.

Repair (AAA). They formed AAA as a limited liability company (LLC). Michael and Devontae each own 50% of the company. The company has been successful primarily based upon reputation and the fact that AAA is available 24 hours a day, seven days a week. Although AAA charges a premium for after normal business hour calls, most of its competitors will not perform services past 9 p.m. and, thus, AAA finds itself often as one of the only available choices for middle of the night emergencies.

Name of Company	AAA Fast Plumbing Repair, LLC
Address:	1456 East Buena Vista Blvd. Los Angeles, CA 90001 (has not changed since inception)
Company formed and started:	January 1, 2012
Accounting Method:	Cash
Tax-year end:	December 31
Employer Identification Number:	34-7652143

Members' Information

Michael Rodriguez

1515 West Bloomington Street

Los Angeles, CA 90001

SSN- 585-31-4060

Phone: 555-234-8745

Profit/Loss/Capital membership interest is 50%

Devontae Johnson

19 East Violet Circle

Los Angeles, CA 90001

SSN: 585-31-6060

Phone: 555-213-0989

Financial Statements:

AAA Plumbing, LLC Balance Sheet

December 31, 2020

Balance Sheet

12/31/201912/31/2020

Assets:

Cash	$ 30,000	$ 45,000
Tax-exempt Securities Building	100,000	100,000
Less: Acc. Depreciation	(551,282)	(653,842)

Equipment

Less: Acc. Depreciation(2,231,653) Land1 000 000

Total Assets: Liabilities and Capital:	$5,597,318
Note Payable-First National Bank	$4,267,318
Note Payable-Michael Rodriguez	300,000	300,000
Note Payable-Devontae Johnson	200,000	200,000
Capital Account-MR	415,000	481,416
Capital Account-DJ	415 000	481 416
Total Liabilities and Capital:	$5,597,318

Profit/Loss/Capital membership interest is 50%.

Other information:

For any 'yes' or 'no' questions on Schedule B, assume the answer is 'no' unless explicitly stated in the facts below.

• AAA is a domestic limited liability company.
• Michael and Devontae are U.S. citizens and are not related, each owning 50% of the LLC. Both Michael and Devontae are managing members.
• All of AAA's activities constitute a qualified trade or business, and the salaries and wages expense from the income statement is the same as W-2 wages paid by AAA in 2020.
• The total unadjusted basis for all assets placed in service for the prior 10 years matches the book value of all assets reported on the balance sheet.
• Michael is the Partnership Representative and AAA is not electing out of the centralized partnership audit regime

Both Michael and Devontae are active in the business and work full-time for AAA.

The debt owed to First National Bank is a non-recourse obligation and neither Michael nor Devontae have guaranteed its repayment (see balance sheet below). This debt is not directly tied to any specific asset but is rather a debt secured against all of the assets of the company.

• During the year, Michael and Devontae each contributed $20,000 to the capital of AAA.
• AAA makes the de minimis safe harbor election under the Tangible Property Regs
• AAA does not maintain any inventory. AAA purchases supplies and has a policy of expensing such purchases as paid for tax and book purposes consistent with existing tax law.
• AAA uses MACRS depreciation for both tax and book purposes.
• During the year, Michael and Devontae each received a $75,000 distribution from AAA. During the year, AAA acquired the following assets (all assets were placed in service on the acquisition dates as indicated below):
• Service vans-new (not Luxury Automobiles) July 1, 2020 $500,000 o Plumbing machinery/equipment-new July 1, 2020 $250,000
• AAA will not claim Section 179 expense for any of the current year asset additions but otherwise wishes to maximize its 2020 depreciation deduction for the newly acquired assets. AAA's tax depreciation on assets acquired in tax years prior to 2020 is $102,813.

Income:

Service Revenue-Cash Service Revenue-Credit Cards	$ 343,565
Consulting Revenue-Cash	$ 50,950
Consulting Revenue-Credit Cards	$ 155,005
Interest Income-First National Bank	1,540
Municipal Bond Interest Income Total Income: Expenses:	S 2,500

Employee Salaries 515,735 Guaranteed payment-MR 50,000 Guaranteed payment-DJ50,000

Repairs and Maintenance-Trucks 113,415

35,000

Payroll Taxes 41,260 Licensing Fees1,750 Property Taxes 77 ,ooo Interest Expense 235,000 Depreciation 852,813 Office Supplies3,420 Employee Training5,675

Advertising 18,850

Plumbing supplies 15,125

Meals (prior to disallowance) 13,740

Travel4,210

Gasoline 158,675

Utilities 24,940 Telephone 16,830

Total Expenses

Net Income $ 242,832