Problem 14-16 (Algorithmic) (LO. 4, 5, 7) 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, Amy's tax basis capital account has a balance of $804,000, and the LLC has debts of $522,600 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 equals revenue less operating expenses (other than expenses listed separately above). Year-end LLC debt payable to unrelated parties is $365,820. 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. a. Calculate Amy's basis in her LLC interest at the beginning and end of the tax year. Use her capital account as a starting point. LLC interest at the beginning of the year: \$ LLC interest at the end of the year: 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. What income, gains, losses, and deductions does Amy report on her income tax return? If an amount is zero, enter "0". c. Based on the information provided, what other calculations is Amy required to make? Amy 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 Amy or the LLC, and it affect her basis or capital account. As someone treated as a general partner, Amy'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 Partially correct d. Prepare Amy's tax basis capital account roll forward from the beginning to the end of the tax year. How does her ending capital account differ from her ending tax basis in the LLC interest as calculated in part (a)? Amy's capital account differs from her basis only by the amount of her share of LLC 651121 Final K-1 Amended K-1 OMB No. 15450123 Schedule K-1 (Form 1065) Department of the Treasury Internal Revenue Service beginning//2022ending/// Partner's Share of Income, Deductions, Credits, etc. See separate instructions. Part I Information About the Partnership A Partnership's employer identification number B Partnership's name, address, city, state, and ZIP code AM Products, LLC \begin{tabular}{|ll|} \hline C & IRS Center where partnership filed return: \\ \hline D Check if this is a publicly traded partnership (PTP) \\ \hline \end{tabular} Part II Information About the Partner E Partner's SSN or TIN (Do not use TIN of a disregarded entity. See instructions.) F Name, address, city, state, and ZIP code for partner entered in E. See instructions. TIN Name I1 What type of entity is this partner? Indivirdual I2 If this partner is a retirement plan (IRA/SEP/Keogh/etc.), check here J Partner's share of profit, loss, and capital (see instructions): \begin{tabular}{|c|c|c|c|} \hline \multicolumn{2}{|c|}{ Beginning } & \multirow[t]{2}{*}{ Ending } & \\ \hline Profit & % & & % \\ \hline Loss & % & & % \\ \hline Capital & % & & % \\ \hline \end{tabular} Check if decrease is due to sale or exchange of partnership 2022 For calendar year 2022, or tax year \begin{tabular}{|l|l|} \hline 1 & \begin{tabular}{l} Ordinary business income \\ (loss) \end{tabular} \\ \hline \end{tabular} 2 Net rental real estate income (loss) \begin{tabular}{|c|l|} \hline 3 & Other net rental income (loss) \\ \hline 4a & \begin{tabular}{l} Guaranteed payments for \\ services \end{tabular} \\ \hline 4b & \begin{tabular}{l} Guaranteed payments for \\ capital \end{tabular} \\ \hline 4c & Total guaranteed payments \\ \hline 5 & Interest income \\ \hline \end{tabular} 6a Ordinary dividends \begin{tabular}{|c|c|} \hline 6b & Qualified dividends \\ \hline \end{tabular} Tax-exempt income and nondeductible expenses 6c Dividend equivalents \begin{tabular}{|c|c|c|c|} \hline Part III & \multicolumn{3}{|c|}{\begin{tabular}{l} Partner's Share of Current Year Income, \\ Deductions, Credits, and Other Items \end{tabular}} \\ \hline 1 & \begin{tabular}{l} Ordinary business income \\ (loss) \end{tabular} & \begin{tabular}{c} 14 \\ A \end{tabular} & \begin{tabular}{l} Self-employment earnings \\ (loss) \end{tabular} \\ \hline 2 & \begin{tabular}{l} Net rental real estate income \\ (loss) \end{tabular} & & \\ \hline 3 & Other net rental income (loss) & 15 & Credits \\ \hline 4a & \begin{tabular}{l} Guaranteed payments for \\ services \end{tabular} & & \\ \hline 4b & \begin{tabular}{l} Guaranteed payments for \\ capital \end{tabular} & 16 & \begin{tabular}{l} Schedule K3 is attached if \\ checked \end{tabular} \\ \hline 4c & Total guaranteed payments & 17 & \begin{tabular}{l} Alternative minimum tax \\ (AMT) items \end{tabular} \\ \hline 5 & Interest income & & \\ \hline 6a & Ordinary dividends & & \\ \hline 6b & Qualified dividends & 18 & \begin{tabular}{l} Tax-exempt income and \\ nondeductible expenses \end{tabular} \\ \hline 6c & Dividend equivalents & & \\ \hline 7 & Royalties & & \\ \hline 8 & \begin{tabular}{l} Net short-term capital gain \\ (loss) \end{tabular} & & \\ \hline 9a & \begin{tabular}{l} Net long-term capital gain \\ (loss) \end{tabular} & \begin{tabular}{c} 19 \\ A \end{tabular} & Distributions \\ \hline 9b & Collectibles (28\%) gain (loss) & & \\ \hline 9c & \begin{tabular}{l} Unrecaptured section 1250 \\ gain \end{tabular} & \begin{tabular}{c} 20 \\ A \end{tabular} & Other information \\ \hline 10 & Net section 1231 gain (loss) & Z & \begin{tabular}{l} STMT \\ QBI \end{tabular} \\ \hline \end{tabular} I1 What type of entity is this partner? I2 If this partner is a retirement plan (IRA/SEP/Keogh/etc.), check here J Partner's share of profit, loss, and capital (see instructions): Check if decrease is due to sale or exchange of partnership interest K Partner's share of liabilities: Check this box if Item K includes liability amounts from lower-tier partnerships L M Did the partner contribute property with a built-in gain (loss)? Yes No If "Yes," attach statement. See instructions. N Partner's Share of Net Unrecognized Section 704(c) Gain or (Loss) Beginning Ending $