Question:

1. Kerry received a 1/3 profits and capital interest in Bright Line, LLC in exchange for legal services she provided. In addition to her share of partnership profits or losses, she receives a $22,000 guaranteed payment each year for ongoing services she provides to the LLC.

For X4, Bright Line reported the following revenues and expenses:

Sales -	$140,000
Cost of Goods Sold -	$80,000
Depreciation Expense -	$41,000
Long-Term Capital Gains -	$7,000
Qualified Dividends -	$5,100
Municipal Bond Interest -	$3,200.

How much ordinary business income (loss) will Bright Line allocate to Kerry on her Schedule K-1 for X4?

2. Andy and Shay are married and live in Texas, a community property state. For their birthdays this year Andy gave cash gifts of $25,100 to each of his two daughters, and Shay gave $36,800 to her niece.

What is the amount of Andy\'s taxable gifts?

a. zero, if Andrew and Brianna elect to split gifts.

b. None of these.

c. $4,400

d. $14,000

e. $28,000

3. On January 1, X9, Gerald received his 50% profits and capital interest in High Air, LLC in exchange for $2,020 in cash and real property with a $3,020 tax basis secured by a $2,020 non-recourse mortgage.

High Air reported a $15,020 loss for its X9 calendar year.

a. How much loss can Gerald deduct?

b. How much loss must he suspend, if he only applies the tax basis loss limitation?

4. Kathy is a 25% partner in the KDP Partnership and receives a parcel of land with a fair value of $150,000 (inside basis of $102,000) in complete liquidation of her partnership interest.

Kathy\'s outside basis immediately before the distribution is $200,000.

KDP currently has a Section 754 election in effect and has no hot assets or liabilities.

What is KDP\'s special basis adjustment from the distribution?

5. At her death Siena owned real estate worth $270,000 that was titled with her sister in joint tenancy with the right of survivorship.

Siena contributed $43,000 to the total cost of the property and her sister contributed the remaining $80,000.

What amount, if any, is included in Siena\'s gross estate?

6. Alexis transferred $470,000 to a trust with directions to pay income to her spouse, William, for his life. After William\'s death the corpus of the trust will pass to William\'s son.

If the life estate is valued at $73,000, what is the total amount of the taxable gifts?

Please do explain, I have the answers but I do not know how it was derived.