Problem 10-37 (Algorithmic) (LO. 6, 7, 8, 9, 10, 11) 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 $780,000, and the LLC has debts of $507,000 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* $1,170,000 W-2 wages 200,000 Depreciation expense 300,000 Interest income 11,700 Long-term capital loss 7,800 23,400 Long-term capital gain Charitable contribution (cash) 11,750 Cash distribution to Amy 58,500 Unadjusted basis of partnership property immediately after acquisition 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 $354,900. Assume that all transactions are reflected in Amy's beginning capital and basis in the same manner. Also assume that all AM Products' activities are eligible for the qualified business income deduction. 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. manager member 8 Net short-term capital gain (loss) H1 x Domestic partner Foreign partner H2 If the partner is a disregarded entity (DE), enter the partner's: TIN Name 9a Net long-term capital gain (loss) 7,800 18 Tax-exempt income and nondeductible expenses 11 What type of entity is this partner? 9b Collectibles (28%) gain (loss) A I2 If this partner is a retirement plan (IRA/SEP/Keogh/etc.), check here o 9c Unrecaptured section 1250 gain 10 Net section 1231 gain (loss) J Partner's share of profit, loss, and capital (see instructions): Beginning Ending 11 Other income (loss) 19 Distributions Profit % % A Loss % % Capital % % 12 Section 179 deduction 20 Other information Check if decrease is due to sale or exchange of partnership interest o A 13 Other deductions Z* STMT QBI A K Partner's share of liabilities: Beginning Ending W-2 wages Nonrecourse $ $ Qualified nonrecourse financing $ $ UBIA Recourse $ $ Check this box if Item K includes liability amounts from lower 12 Section 179 deduction 20 Other information Check if decrease is due to sale or exchange of partnership interest A 13 Other deductions Z* STMT QBI K Partner's share of liabilities: Beginning Ending 0000 W-2 wages Nonrecourse $ $ Qualified nonrecourse financing $ UBIA Recourse $ Check this box if Item K includes liability amounts from lower tier partnerships. 14 Self-employment earnings (loss) A L Partner's capital account analysis: Beginning capital account ...... Capital contributed during the year. . $ 21 - More than one activity for at-risk purposes* 22 - More than one activity for passive activity purposes* Current year net income (loss) $ *See attached statement for additional information. Other increase (decrease) (attach explanation) $ Withdrawals & distributions $ Ending capital account $ M Did the partner contribute property with a built-in gain or loss?
