28. LO.4, 7 Ming and Denise, mother and daughter, operate a local restaurant as an LLC. The MD LLC earned a profit of $200,000 in the current year. Denise’s equal LLC interest was acquired by gift from Ming. Assume that capital is a material income-producing factor and that Ming manages the day-to-day operations of the restaurant without any help from Denise. Reasonable compensation for Ming’s services is $50,000.

a. How much of the MD income is allocated to Ming?

b. What is the maximum amount of LLC income that can be allocated to Denise?

c. Assuming that Denise is 15 years old, has no other income, and is claimed as a dependent by Ming, how is Denise’s income from the restaurant taxed?