Problem 10-37 (LO. 6, 7, 8, 9, 10, 11) Amy and Mitchell share equally in the profits, losses, and capital of the accrual basis AM Products LLC. The LLC does not need to report financial information to any third parties, so capital accounts are determined using tax rules (rather than GAAP). 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. Revenues $1,400,000 Other operating expenses (@.g., utilities, repairs, rent, etc.) 500,000 w-2 wages to employees 200,000 Depreciation expense 300,000 Interest income 4,000 Long-term capital gain 6,000 Charitable contribution (cash) 4,000 Cash distribution to Amy 20,000 Unadjusted basis of partnership depreciable property immediately after acquisition 1,600,000 Vear-end LLC debt payable to unrelated parties is $140,000. Assume that all transactions are reflected in Amy's beginning capital and basis in the same manner. All AM Products' activities are eligible for the qualified business income deduction. a. Calculate Amy's basis in her LLC interest at the beginning and end of the tax year. LLC interest at the beginning of the year: LLC interest at end of the year: s b. What income, gains, losses, and deductions does Amy report on her income tax return? If an amount is zero, enter "0". Ordinary income Net long-term capital gain Interest income Charitable contribution deduction Cash distribution
Problem 10-37 (LO. 6, 7, 8, 9, 10, 11) Amy and Mitchell share equally in the profits, losses, and capital of the accrual basis AM Products LLC. The LLC does not need to report financial information to any third parties, so capital accounts are determined using tax rules (rather than GAAP). 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. Revenues $1,400,000 Other operating expenses (@.g., utilities, repairs, rent, etc.) 500,000 w-2 wages to employees 200,000 Depreciation expense 300,000 Interest income 4,000 Long-term capital gain 6,000 Charitable contribution (cash) 4,000 Cash distribution to Amy 20,000 Unadjusted basis of partnership depreciable property immediately after acquisition 1,600,000 Vear-end LLC debt payable to unrelated parties is $140,000. Assume that all transactions are reflected in Amy's beginning capital and basis in the same manner. All AM Products' activities are eligible for the qualified business income deduction. a. Calculate Amy's basis in her LLC interest at the beginning and end of the tax year. LLC interest at the beginning of the year: LLC interest at end of the year: s b. What income, gains, losses, and deductions does Amy report on her income tax return? If an amount is zero, enter "0". Ordinary income Net long-term capital gain Interest income Charitable contribution deduction Cash distribution
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem 10-37 (LO. 6, 7, 8, 9, 10, 11)
Amy and Mitchell share equally in the profits, losses, and capital of the accrual basis AM Products LLC. The LLC does not need to report
financial information to any third parties, so capital accounts are determined using tax rules (rather than GAAP). 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.
Revenues
$1,400,000
Other operating expenses (e.g., utilities, repairs, rent, etc.)
500,000
W-2 wages to employees
200,000
Depreciation expense
300,000
Interest income
4,000
Long-term capital gain
6,000
Charitable contribution (cash)
4,000
Cash distribution to Amy
20,000
Unadjusted basis of partnership depreciable property
immediately after acquisition
1,600,000
Year-end LLC debt payable to unrelated parties is $140,000.
Assume that all transactions are reflected in Amy's beginning capital and basis in the same manner. All AM Products' activities are eligible
for the qualified business income deduction.
a. Calculate Amy's basis in her LLC interest at the beginning and end of the tax year.
LLC interest at the beginning of the year: $
LLC interest at end of the year: $
b. What income, gains, losses, and deductions does Amy report on her income tax return?
If an amount is zero, enter "0".
Ordinary income
Net long-term capital gain
Interest income
Charitable contribution deduction
Cash distribution
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