Ryan Ross (111-11-1112), Oscar Omega (222-22-2223), Clark Carey (333-33-3334), and Kim Kardigan (444-44-4445) are equal active members in ROCK the Ages LLC. ROCK serves as agent and manager for prominent musicians 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, 2009. Its current address is 6102 Wilshire Boulevard, Suite 2100, Los Angeles, CA 90036. ROCK was the force behind such music icons as Adrianna Venti, Drake Malone, Elena Gomez, Tyler Quick, Queen Bey, and Bruno Mercury and has had a very profitable year. The following information was taken from the LLC's income statement for the current year.

Revenues
Fees and commissions	$4,800,000
Taxable interest income from bank deposits	1,600
Tax-exempt interest	3,200
Net gain on stock sales	4,000
Total revenues	$4,808,800
Expenses
Advertising and public relations	$380,000
Charitable contributions	28,000
179 expense	20,000
Employee salaries and wages	1,000,000
Guaranteed payment (services), Ryan Ross, office manager	800,000
Guaranteed payment (services), other members	600,000
Business meals, subject to 50% disallowance	200,000
Business restaurant meals and travel (100% deductible)	320,000
Legal and accounting fees	132,000
Office rentals paid	80,000
Interest expense on operating line of credit	10,000
Insurance premiums	52,000
Office expense	200,000
Payroll taxes	92,000
Utilities	54,800
Total expenses	$3,968,800

Recently, ROCK has taken advantage of bonus depreciation and 179 deductions and fully remodeled the premises and upgraded its leasehold improvements. This year, ROCK wrapped up its remodel with the purchase of $20,000 of office furniture for which it will claim a 179 deduction. (For simplicity, assume that ROCK uses the same cost recovery methods for both tax and financial purposes.) There is no depreciation adjustment for alternative minimum tax purposes.

ROCK invests much of its excess cash in non-dividend-paying growth stocks and tax-exempt securities. During the year, the LLC sold two securities. On June 15, 2021, ROCK purchased 1,000 shares of Tech, Inc., stock for $100,000; it sold those shares on December 15, 2021, for $80,000. On March 15, 2020, ROCK purchased 2,000 shares of BioLabs, Inc., stock for $136,000; it sold those shares for $160,000 on December 15, 2021. These transactions were reported to the IRS on Forms 1099-B; ROCK's basis in these shares was reported.

Net income per books is $840,000. On January 1, 2021, the members' tax basis capital accounts equaled $200,000 each. No additional capital contributions were made in 2021. In addition to their guaranteed payments, each member withdrew $250,000 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, 2021, is as follows.

	Beginning		Ending
Cash	$444,000		$??
Tax-exempt securities	120,000		120,000
Marketable securities	436,000		300,000
Leasehold improvements, furniture, and equipment	960,000		980,000
Accumulated depreciation	(960,000)		(980,000)
Total assets	$1,000,000		$??
Operating line of credit	$200,000		$160,000
Capital, Ross	200,000		??
Capital, Omega	200,000		??
Capital, Carey	200,000		??
Capital, Kardigan	200,000		??
Total liabilities and capital	$1,000,000		$??

The firm's activities do not constitute "qualified production activities" for purposes of the 199 deduction. (Note that the 179 deduction is a business-related expense.) The LLC's UBIA (unadjusted basis immediately after acquisition) equals the total original cost of all leasehold improvements, or $980,000.All debt is shared equally by the members. Each member has personally guaranteed the debt of the LLC. All members are active in LLC operations. The business code for the entity is 711410.

Form 1065 (2021)		ROCK the Ages LLC				55-5555556	Page 5
Analysis of Net Income (Loss)
1	Net income (loss). Combine Schedule K, lines 1 through 11. From the result, subtract the sum of Schedule K, lines 12 through 13d, and 21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .							1	in the blank
2	Analysis by partner type:	(i) Corporate	(ii) Individual (active)	(iii) Individual (passive)	(iv) Partnership	(v) Exempt Organization			(vi) Nominee/ Other
a	General partners
b	Limited partners		in the blank

Schedule L

Balance Sheets per Books

Beginning of tax year

End of tax year

	Assets	(a)	(b)	(c)	(d)
1	Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		in the blank		in the blank
2a	Trade notes and accounts receivable . . . . . . . . . . .
b	Less allowance for bad debts . . . . . . . . . . . . . . . .
3	Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4	U.S. government obligations . . . . . . . . . . . . . . . . .
5	Tax-exempt securities . . . . . . . . . . . . . . . . . . . . .		in the blank		in the blank
6	Other current assets (attach stmt) See St 4		in the blank		in the blank
7a	Loans to partners (or persons related to partners) .
b	Mortgage and real estate loans . . . . . . . . . . . . . . .
8	Other investments (attach stmt) . . . . . . . . . . . . . .
9a	Buildings and other depreciable assets . . . . . . . . . .	in the blank		in the blank
b	Less accumulated depreciation . . . . . . . . . . . . . . .	in the blank		in the blank
10a	Depletable assets . . . . . . . . . . . . . . . . . . . . . . . .
b	Less accumulated depletion . . . . . . . . . . . . . . . . .
11	Land (net of any amortization) . . . . . . . . . . . . . . .
12a	Intangible assets (amortizable only) . . . . . . . . . . .
b	Less accumulated amortization . . . . . . . . . . . . . . .
13	Other assets (attach stmt) . . . . . . . . . . . . . . . . . .
14	Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .		in the blank		in the blank
	Liabilities and Capital
15	Accounts payable . . . . . . . . . . . . . . . . . . . . . . . .
16	Mortgages, notes, bonds payable in less than 1 year
17	Other current liabilities (attach stmt) See St 5		in the blank		in the blank
18	All nonrecourse loans . . . . . . . . . . . . . . . . . . . . . .
19a	Loans from partners (or persons related to partners)
b	Mortgages, notes, bonds payable in 1 year or more
20	Other liabilities (attach stmt) . . . . . . . . . . . . . . . .
21	Partners' capital accounts . . . . . . . . . . . . . . . . . . .		in the blank		in the blank
22	Total liabilities and capital . . . . . . . . . . . . . . . . . . .		in the blank		in the blank