South-Western Federal Taxation 2019 Edition 42 Chapter 10 Problem 47

Problem 10-47 (LO. 7, 8) 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 capital account has a balance of $300,000, and the LLC has debts of $200,000 payable to unrelated parties. The debts are recourse to the LLC, but neither of the LLC members has personally guaranteed them. Assume that all LLC debt is shared equally between the partners. The following information about AM's operations for the current year is obtained from the LLC's records Ordinary income W-2 wages to employees Depreciation expense Interest income Short-term capital loss Long-term capital gain Charitable contribution (cash) Cash distribution to Amy Unadjusted basis of partnership depreciable property $900,000 200,000 300,000 4,000 6,000 12,000 4,000 20,000 1,600,000 Year-end LLC debt payable to unrelated parties is $140,000 Assume all transactions are reflected in her beginning capital and basis in the same manner, what should Amy report on her income tax return. If an amount is zero, enter "O Ordinary income Net long-term capital gain Interest income Charitable contribution deduction Cash distribution 3,000v 2,000 2,000 V 0 Amy may be eligible to deduct up to make that calculation on her return. This deduction does not require a cash outflow by Amy or the LLC, and it does not affect her basis or capital account. As someone treated as a general partner, Amy's distributive share of the LLC's ordinary business income is subject to self-employment tax and possibly the additional Medicare tax. Her net investment income from the LLC may be subject to the additional tax under 1411 20 % of the ordinary income as qualified business income under 199A, and will Problem 10-47 (LO. 7, 8) 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 capital account has a balance of $300,000, and the LLC has debts of $200,000 payable to unrelated parties. The debts are recourse to the LLC, but neither of the LLC members has personally guaranteed them. Assume that all LLC debt is shared equally between the partners. The following information about AM's operations for the current year is obtained from the LLC's records Ordinary income W-2 wages to employees Depreciation expense Interest income Short-term capital loss Long-term capital gain Charitable contribution (cash) Cash distribution to Amy Unadjusted basis of partnership depreciable property $900,000 200,000 300,000 4,000 6,000 12,000 4,000 20,000 1,600,000 Year-end LLC debt payable to unrelated parties is $140,000 Assume all transactions are reflected in her beginning capital and basis in the same manner, what should Amy report on her income tax return. If an amount is zero, enter "O Ordinary income Net long-term capital gain Interest income Charitable contribution deduction Cash distribution 3,000v 2,000 2,000 V 0 Amy may be eligible to deduct up to make that calculation on her return. This deduction does not require a cash outflow by Amy or the LLC, and it does not affect her basis or capital account. As someone treated as a general partner, Amy's distributive share of the LLC's ordinary business income is subject to self-employment tax and possibly the additional Medicare tax. Her net investment income from the LLC may be subject to the additional tax under 1411 20 % of the ordinary income as qualified business income under 199A, and will