Ryan Bogan (111-11-1112), Oscar Young (222-22-2223), Clark Coleman (333-33-3334), and Kim Hoffman (444-44-4445) are equal, active, and unrelated members in Bogan Engineering LLC (Bogan). Bogan is an engineering services for clients that build major bridges and highways in the Los Angeles area. The LLC's Federal ID number is 55-5555556. It uses the cash basis and the calendar year and began operations on January 1, 2007. Its current address is 2501 La Cienega Boulevard, Suite 2100, Los Angeles, CA 90210. The financial information enclosed from the LLC's income statement for the current year. Recently, Bogan has taken advantage of bonus depreciation and 179 deductions and fully remodeled the premises and upgraded its leasehold improvements. This year, Bogan wrapped up its remodel with the purchase of $90,000 of office furniture for which it will claim a 168(k) deduction. (For simplicity, assume that Cam uses the same cost recovery methods for both tax and financial purposes.) There is no depreciation adjustment for alternative minimum tax purposes. Bogan invests much of its excess cash in dividend-paying stocks and tax-exempt securities. During the year, the LLC several securities transactions. On June 15, purchased 1,000 shares of Fountain, Inc. stock for $100,000; it sold those shares on December 15 for $75,000. On March 15 of last year, Bogan purchased 2,000 shares of Young Machinery, Inc. stock for $189,000; it sold those shares for $199,500 on December 15 of the current year. These transactions were reported to the IRS on Forms 1099-B; Bogans' basis in these shares was reported. Each member received an equal guaranteed payment for services rendered. Also, Ryan Bogan loaned the partnership $1,000,000 in 2009. It is an interest only note due in 2026. The LLC issued Ryan a 1099 INT for the interest on the loan. Net income per books is $1,101,200. On January 1, the members' capital accounts equaled $250,000 each. No additional capital contributions were made this year. In addition to their guaranteed payments, each member withdrew $200,000 cash during the year. All contributions and distributions have been in cash, so the LLC has no net unrecognized 704(c) gain or loss. The LLC's balance sheet as of December 31 of this year is also enclosed. Except for the Ryan Bogan loan, all debt is shared equally by the members. Each member has personally guaranteed the line of credit debt of the LLC. All members are active in LLC operations. For our purposes, assume that Bogans' operations constitute one active trade or business for purposes of the passive activity and at-risk limitations. (Note that the 179 deduction is a business-related expense.). The appropriate business code for the entity is 237310. For the Form 1065, page 5, Analysis of Net Income, put all partners' allocations in cell 2(b)(ii), per IRS instructions for an LLC.