Problem 10-37 (Algorithmic) (LO. 6, 7, 8, 9, 10, 11) Amy and Mitchell share equally (50%) 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 tax basis capital account has a balance of $736,000, and the LLC has debts of $478,400 payable to unrelated parties. All debts are recourse to the LLC, but neither of the LLC members has personally guaranteed them. The following information about AM's operations for the current year is obtained from the LLC's records. Operating income* W-2 wages Depreciation expense Interest income Long-term capital loss Long-term capital gain Charitable contribution (cash) $1,104,000 200,000 300,000 11,040 7,360 22,080 11,090 55,200 Cash distribution to Amy Unadjusted basis of partnership property immediately after acquisition 1,600,000 Operating income equals revenue less operating expenses (other than expenses listed separately above). Year-end LLC debt payable to unrelated parties is $334,880. Assume that all transactions are reflected in Amy's beginning capital and basis in the same manner. Also assume that all AM Products' activities are eligible for the qualified business income deduction.
Problem 10-37 (Algorithmic) (LO. 6, 7, 8, 9, 10, 11) Amy and Mitchell share equally (50%) 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 tax basis capital account has a balance of $736,000, and the LLC has debts of $478,400 payable to unrelated parties. All debts are recourse to the LLC, but neither of the LLC members has personally guaranteed them. The following information about AM's operations for the current year is obtained from the LLC's records. Operating income* W-2 wages Depreciation expense Interest income Long-term capital loss Long-term capital gain Charitable contribution (cash) $1,104,000 200,000 300,000 11,040 7,360 22,080 11,090 55,200 Cash distribution to Amy Unadjusted basis of partnership property immediately after acquisition 1,600,000 Operating income equals revenue less operating expenses (other than expenses listed separately above). Year-end LLC debt payable to unrelated parties is $334,880. Assume that all transactions are reflected in Amy's beginning capital and basis in the same manner. Also assume that all AM Products' activities are eligible for the qualified business income deduction.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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S5.
Transcribed Image Text:a. Calculate Amy's basis in her LLC interest at the beginning and end of the tax year. Use her capital account as a starting point.
LLC interest at the beginning of the year:
975,200✔
LLC Interest at the end of the year:
1,346,855 X
Transcribed Image Text:Problem 10-37 (Algorithmic) (LO. 6, 7, 8, 9, 10, 11)
Amy and Mitchell share equally (50%) 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 tax basis capital account has a balance of $736,000, and the LLC has debts of $478,400
payable to unrelated parties. All debts are recourse to the LLC, but neither of the LLC members has personally guaranteed them. The
following information about AM's operations for the current year is obtained from the LLC's records.
Operating income*
W-2 wages
Depreciation expense
Interest income
Long-term capital loss
Long-term capital gain
Charitable contribution (cash)
$1,104,000
200,000
300,000
11,040
7,360
22,080
11,090
55,200
Cash distribution to Amy
Unadjusted basis of partnership property.
immediately after acquisition
1,600,000
Operating income equals revenue less operating expenses (other than expenses listed separately above).
Year-end LLC debt payable to unrelated parties is $334,880. Assume that all transactions are reflected in Amy's beginning capital and basis
in the same manner. Also assume that all AM Products' activities are eligible for the qualified business income deduction.
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