Continue with the same facts of Problem 16. Consider Amy’s tax-basis capital account. 

a. What is Amy’s capital account at the beginning of the year? 

b. What is Amy’s capital account at the end of the year? 

c. How do the capital account balances differ from her basis amounts in Problem 16? 

Data From Problem 16

Amy and Mitchell share equally in the profits, losses, and capital of the accrual basis AM Products LLC. Amy is the managing member of the LLC (treated as a general partner) and is a U.S. citizen. At the beginning of the current tax year, Amy’s capital account has a balance of $300,000, and the LLC has recourse debts of $200,000 payable to unrelated parties. All partnership recourse debt is shared equally between the partners. 

Ordinary income......................................................$ 900,000 

W–2 wages to employees.........................................200,000 

Depreciation expense...............................................300,000 

Interest income from P & G bond..............................4,000 

Long-term capital loss.................................................6,000 

Short-term capital gain.............................................12,000 

Charitable contribution..............................................4,000 

Cash distribution to Amy............................................20,000 

Unadjusted basis of partnership depreciable property......1,600,000