Amy and Mitchell share equally in the profits, losses, and capital of the accrua
ID: 2572355 • Letter: A
Question
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 $632,000, and the LLC has debts of $410,800 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.
Year-end LLC debt payable to unrelated parties is $287,560. If all transactions are reflected in her beginning capital and basis in the same manner, what is Amy's basis in her LLC interest:
a. Amy's basis in the LLC interest at the beginning of the year is $.
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b. Amy's basis in the LLC interest at the end of the year is $.
Ordinary income $821,600 Interest income 8,216 Short-term capital loss 1,643 Long-term capital gain 4,929 Charitable contribution 8,266 Cash distribution to Amy 41,080Explanation / Answer
Solution:
a) Calculation of the Amy's Basis in the LLC Interest at the Beginning of the Year:
b) Calculation of the Amy's Basis in the LLC Interest at the End of the Year:
Capital account balance, beginning of the year $632,000 Share of AM's Debt ($410,800 * 1/2) $205,400 Amy's basis at the beginning of the year $837,400Related Questions
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