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 agents and managers 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, 2008. 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
Section 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
Travel	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, 2020, ROCK purchased 1,000 shares of Tech, Inc., stock for $100,000; it sold those shares on December 15, 2020, for $80,000. On March 15, 2019, ROCK purchased 2,000 shares of BioLabs, Inc., stock for $136,000; it sold those shares for $160,000 on December 15, 2020. These transactions were reported to the IRS on Forms 1099B; ROCK's basis in these shares was reported.

Net income per books is $840,000. On January 1, 2020, the members' capital accounts equaled $200,000 each. No additional capital contributions were made in 2020. 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, 2020, 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 LLCs 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. Complete the 2020 Form 1065 for ROCK the Ages LLC with appropriate forms and schedules. Prepare Schedule K1 for Ryan Ross.

• If an amount box does not require an entry or the answer is zero, enter "0".
• Enter all amounts as positive numbers, unless otherwise instructed.
• If required, round amounts to the nearest dollar.
• Make realistic assumptions about any missing d

Caution: Include only trade or business income and expenses on lines la through 22 below. See the instructions for more information. la Gross receipts or sales 1a b Returns and allowances 1b c Balance. Subtract line 1b from line 1a 1c 2 Cost of goods sold (attach Form 1125-A) 2 3 Gross profit. Subtract line 2 from line 1c. 3 m 30 Z 4 4 Ordinary income (loss) from other partnerships, estates, and trusts (attach statement) 5 Net farm profit (loss) (attach Schedule F (Form 1040))... 6 Net gain (loss) from Form 4797, Part II, line 17 (attach Form 4797) 5 6 7 Other income (loss) (attach statement) 7 8 Total income (loss). Combine lines 3 through 7 8 9 Salaries and wages (other than to partners) (less employment credits) 9 10 Guaranteed payments to partners 10 11 Repairs and maintenance 11 AWADU-HOZW www HZO 12 Bad debts.. 12 13 Rent 13 14 Taxes and licenses 14 15 Interest (see instructions). 15 12 L I M 18 Retirement plans, etc .. 18 T 19 Employee benefit programs . 19 20 Other deductions (att stmt) See Statement 1 20 21 Total deductions. Add the amounts shown in the far right column for lines 9 through 20.. 21 22 Ordinary business income (loss). Subtract line 21 from line 8. 22 23 Interest due under the look-back method completed long-term contracts (attach Form 8697) 23 XD 24 Interest due under the look-back method income forecast method (attach Form 8866).. 24 A N 25 BBA AAR imputed underpayment (see instructions) 25 ZA 26 Other taxes (see instructions). 26 27 Total balance due. Add lines 23 through 26 27 P Y M 28 Payment (see instructions). 28 N 29 Amount owed. If line 28 is smaller than line 27, enter amount owed 29 S 30 Overpayment. If line 28 is larger than line 27, enter overpayment . . 30 Schedule K Partners' Distributive Share Items Total amount 1 Ordinary business income (loss) (page 1, line 22) 1 2 Net rental real estate income (loss) (attach Form 8825) 2 3a Other gross rental income (loss) 3a b Expenses from other rental activities (attach stmt) 3b c Other net rental income (loss). Subtract line 3b from line 3a c 4 Guaranteed payments: a Services 4a b Capital 4b c Total. Add lines 4a and 4b 4c 5 Interest income 5 Income (Loss) 6 Dividends and dividend equivalents: a Ordinary dividends b Qualified dividends 6b c Dividend equivalents 6c 7 Royalties .. 7 8 Net short-term capital gain (loss) (attach Schedule D (Form 1065)) 8 9a Net long-term capital gain (loss) (attach Schedule D (Form 1065)). 9a b Collectibles (28%) gain (loss)... 9b 9c c Unrecaptured section 1250 gain (attach statement) 10 Net section 1231 gain (loss) (attach Form 4797). 11 Other income (loss) (see instructions) Type - 10 11 12 Section 179 deduction (attach Form 4562) 12 13a Contributions See Statement 2 13a Deduc- 2a Trade notes and accounts receivable b Less allowance for bad debts.. 3 Inventories ... 4 U.S. government obligations 5 Tax-exempt securities 6 Other current assets (attach stmt) See St 3 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 b Less accumulated depreciation 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.. Liabilities and Capital 15 Accounts payable. 16 Mortgages, notes, bonds payable in less than 1 year 17 Other current liabilities (attach stmt) See St 4 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). 101 21 Partners' capital accounts 22 Total liabilities and capital. Schedule M-1 Reconciliation of Income (Loss) per Books With Income (Loss) per Return Note: The partnership may be required to file Schedule M-3. See instructions. 1 Net income (loss) per books .... 6 Income recorded on books this year not included on Schedule K, lines 1 through 11 (itemize): 2 a Tax-exempt interest .. $ Income included on Schedule K, lines 1, 2, 3c, 5, 6, 7, 8, 9a, 10, and 11, not recorded on books this year (itemize): Guaranteed payments (other than health insurance) .. 3 7 Deductions included on Schedule K, lines 1 through 13d, and 16p, not charged against book income this year (itemize): 4 Expenses recorded on books this year not included on Schedule K, lines 1 through 13d, and 16p (itemize): a Depreciation $ a Depreciation 8 Add lines 6 and 7 b Travel and entertainment $ 9 Income (loss) (Analysis of Net Income (Loss), 5 Add lines 1 through 4 line 1). Subtract line 8 from line 5 Schedule M-2 Analysis of Partners' Capital Accounts 1 Balance at beginning of year 101 6 Distributions: a Cash 2 Capital contributed: a Cash .. b Property b Property 7 Other decreases (itemize): 3 Net income (loss) per books. 4 Other increases (itemize): 8 Add lines 6 and 7 5 Add lines 1 through 4 9 Balance at end of year. Subtract line 8 from 5 BAA Form 1065 (2020)