Problem 1 (30 points) Rocinante, LLC (a partnership) is owned by La Mancha and Aldonza, who are each 50 shareholders At the beginning of the year, Aldonza's outside basis in her Rocinante interest was $60,000 Rocinante reported the following tax information for 2021 Description Amount Sales revenue $ 730,000 Cost of goods sold (400,000 ) Long term capital gain 3,000 Dividend income 8,000 Tax exempt interest 5,000 Guaranteed payment to Aldonza (100,000 ) Employee wages (70,000 ) Description expenses (10,000 ) Miscellaneous expenses (12,000 ) Overall net income $ 154,000 a What amount of ordinary business income is allocated to Aldonza $69,000 b What is the amount and character of separately stated items allocated to Aldonza Long term capital gains $3000 Dividends $8000 Tax exempt Interest $5000 c Assume Rocinante, LLC had no liabilities at the beginning of 2021 At the end of 2021, Rocinante owed $60,000 on a bank note (loan), and $10,000 to La Mancha for a loan he individually made to the LLC What is Aldonza's outside basis in her Rocinante interest at the end of the year

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Problem 1 (30 points) Rocinante, LLC (a partnership) is owned by La Mancha and Aldonza, who are each 50% shareholders. At the beginning of the

Problem 1 (30 points)

Rocinante, LLC (a partnership) is owned by La Mancha and Aldonza, who are each 50% shareholders. At the beginning of the year, Aldonza's outside basis in her Rocinante interest was $60,000. Rocinante reported the following tax information for 2021.

Description	Amount
Sales revenue	$	730,000
Cost of goods sold		(400,000	)
Long-term capital gain		3,000
Dividend income		8,000
Tax exempt interest		5,000
Guaranteed payment to Aldonza		(100,000	)
Employee wages		(70,000	)
Description expenses		(10,000	)
Miscellaneous expenses		(12,000	)
Overall net income	$	154,000

a. What amount of ordinary business income is allocated to Aldonza?

$69,000

b. What is the amount and character of separately stated items allocated to Aldonza?

Long term capital gains: $3000

Dividends: $8000

Tax exempt Interest: $5000

c. Assume Rocinante, LLC had no liabilities at the beginning of 2021. At the end of 2021, Rocinante owed $60,000 on a bank note (loan), and $10,000 to La Mancha for a loan he individually made to the LLC.

What is Aldonza's outside basis in her Rocinante interest at the end of the year?