South-Western Federal Taxation 2019 Edition 42 Chapter 10 Problem 49

Problem 10-49 (LO. 8, 10, 11) 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 (before considering any items below) $900,000 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 $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 Prepare Amy's Schedule K-1 as if you were the preparer of AM Products LLC's tax return. Provide a information that Amy needs to the extent you can. For Parts I and II (Items A to F), omit any missing information (e.g., last names, addresses, EINs, etc.) Enter all amounts as positive numbers 651113 Final K-1 Amended K-1 OMB No. 1545-0123 Part I II Partner's Share of Current Year Income Schedule K-1 (Form 1065) Department of the Treasury Internal Revenue Service 2017 Deductions, Credits, and Other Items Ordinary business income (loss) 1 15 Credits For calendar year 2017, or tax year beginning 2017 ending 20 2 Net rental real estate Partner's Share of Income, Deductions, Credits, etc. See back of form and separate instructions income (loss) 3 Other net rental income 16 Foreign transactions Part I Information About the Partnership (loss) A Partnership's employer identification number 4 Guaranteed payments B Partnership's name, address, city, state, and ZIP code AM Products, LLC 5 Interest income 6a Ordinary dividends C IRS Center where partnership filed return e-file 6b Qualified dividends D Check if this is a publicly traded partnership (PTP) 7 Royalties Part II Information About the Partner 8 Net short-term capital gain Oss E Partner's identifying number Partner: 1 9a Net long-term capital gain (loss) 17 Alternative minimum tax (AMT) items F Partner's name, address, city, state, and ZIP code Amy 9b Collectibles (28%) gain (loss General partner or LLC member- Limited partner or other LLC member G manager 9c Unrecaptured section 1250 H Domestic partner Foreign partner gain 10 Net section 1231 gain (loss) Tax-exempt income and nondeductible expenses 18 I1 What type of entity is this partner? Active Individual 11 Other income (loss) If this partner is a retirement plan (IRA/SEP/Keogh/etc.), check here 12 12 Section 179 deduction 19Distributions J Partner's share of profit, loss, and capital (see instructions) Beginning Ending 13 Other deductions Profit 20 Other information Loss W-2 wages Capital 14 Self-employment earnings OSS Partner's share of liabilities at year end Nonrecourse . .. $ Qualified nonrecourse financing . ...$ Recourse . K Unadjusted basis of partnership depreciable property L Partner's capital account analysis See attached statement for additional information Capital contributed during the year $ Current year increase (decrease) $ Withdrawals & distributions. . .. GAAP Section 704(b) book Tax basis O Other (explain) M Did the partner contribute property with a built-in gain or loss? Yes No If "Yes," attach statement (see instructions) For Paperwork Reduction Act Notice, see Instructions for Form 1065 IRS.gov/form1065 Cat. No. 11394R Schedule K-1 (Form 1065) 2017 Problem 10-49 (LO. 8, 10, 11) 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 (before considering any items below) $900,000 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 $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 Prepare Amy's Schedule K-1 as if you were the preparer of AM Products LLC's tax return. Provide a information that Amy needs to the extent you can. For Parts I and II (Items A to F), omit any missing information (e.g., last names, addresses, EINs, etc.) Enter all amounts as positive numbers 651113 Final K-1 Amended K-1 OMB No. 1545-0123 Part I II Partner's Share of Current Year Income Schedule K-1 (Form 1065) Department of the Treasury Internal Revenue Service 2017 Deductions, Credits, and Other Items Ordinary business income (loss) 1 15 Credits For calendar year 2017, or tax year beginning 2017 ending 20 2 Net rental real estate Partner's Share of Income, Deductions, Credits, etc. See back of form and separate instructions income (loss) 3 Other net rental income 16 Foreign transactions Part I Information About the Partnership (loss) A Partnership's employer identification number 4 Guaranteed payments B Partnership's name, address, city, state, and ZIP code AM Products, LLC 5 Interest income 6a Ordinary dividends C IRS Center where partnership filed return e-file 6b Qualified dividends D Check if this is a publicly traded partnership (PTP) 7 Royalties Part II Information About the Partner 8 Net short-term capital gain Oss E Partner's identifying number Partner: 1 9a Net long-term capital gain (loss) 17 Alternative minimum tax (AMT) items F Partner's name, address, city, state, and ZIP code Amy 9b Collectibles (28%) gain (loss General partner or LLC member- Limited partner or other LLC member G manager 9c Unrecaptured section 1250 H Domestic partner Foreign partner gain 10 Net section 1231 gain (loss) Tax-exempt income and nondeductible expenses 18 I1 What type of entity is this partner? Active Individual 11 Other income (loss) If this partner is a retirement plan (IRA/SEP/Keogh/etc.), check here 12 12 Section 179 deduction 19Distributions J Partner's share of profit, loss, and capital (see instructions) Beginning Ending 13 Other deductions Profit 20 Other information Loss W-2 wages Capital 14 Self-employment earnings OSS Partner's share of liabilities at year end Nonrecourse . .. $ Qualified nonrecourse financing . ...$ Recourse . K Unadjusted basis of partnership depreciable property L Partner's capital account analysis See attached statement for additional information Capital contributed during the year $ Current year increase (decrease) $ Withdrawals & distributions. . .. GAAP Section 704(b) book Tax basis O Other (explain) M Did the partner contribute property with a built-in gain or loss? Yes No If "Yes," attach statement (see instructions) For Paperwork Reduction Act Notice, see Instructions for Form 1065 IRS.gov/form1065 Cat. No. 11394R Schedule K-1 (Form 1065) 2017