LO.7, 9, 10 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 $ 900,000 W–2 wages to employees 200,000 Depreciation expense 300,000 Interest income 4,000 Short-term capital loss 6,000 Long-term capital gain 12,000 Charitable contribution (cash) 4,000 Cash distribution to Amy 20,000 Unadjusted basis of partnership depreciable property 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. Use Microsoft Excel to calculate Amy’s basis in her LLC interest: At the beginning of the year. At the end of the year.
LO.7, 9, 10 Amy and Mitchell share equally in the
| Ordinary income | $ 900,000 |
| W–2 wages to employees | 200,000 |
| Depreciation expense | 300,000 |
| Interest income | 4,000 |
| Short-term capital loss | 6,000 |
| Long-term |
12,000 |
| Charitable contribution (cash) | 4,000 |
| Cash distribution to Amy | 20,000 |
| Unadjusted basis of |
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. Use Microsoft Excel to calculate Amy’s basis in her LLC interest:
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At the beginning of the year.
-
At the end of the year.
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