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 $1,104,000 200,000 300,000 11,040 7,360 Long-term capital gain 22,080 Charitable contribution (cash) 11,090 Cash distribution to Amy 55,200 Unadjusted basis of partnership property 1,600,000 immediately after acquisition 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. e. Using the information from parts (a) to (d), prepare Amy's Schedule K-1 as if you were the preparer of AM Products LLC's tax return. Provide all information that Amy needs to the extent you can. Enter all amounts as positive numbers. 651121 O Final K-1 Amended K-1 OMB No. 1545-0123 Schedule K-1 (Form 1065) Part III 2021 Partner's Share of Current Year Income, Deductions, Credits, and Other Items Department of the Treasury For calendar year 2021, or tax year Internal Revenue Service beginning / 2021 ending 1 Partner's Share of Income, Deductions, Credits, etc. See back of form and separate instructions. A B Part I Information About the Partnership Partnership's employer Identification number Partnership's name, address, city, state, and ZIP code AM Products, LLC 1 Ordinary business income 14 Self-employment earnings (loss) A (loss) 2 Net rental real estate income (loss) 3 Other net rental income (loss) 15 Credits 4a Guaranteed payments for services 4b Guaranteed payments for capital 16 Schedule K-3 is attached if checked C IRS Center where partnership filed return 4c Total guaranteed payments 17 Check if this is a publicly traded partnership (PTP) Alternative minimum tax (AMT) Items E Part II Information About the Partner 5 Interest income Partner's SSN or TIN (Do not use TIN of a disregarded entity. See Inst.) 5,520 6a Ordinary dividends, Name, address, city, state, and ZIP code for partner entered in E. See instructions. 6b Qualified dividends 18 Tax-exempt income and nondeductible expenses H1 General partner or LLC member-0 Limited partner or other LLC manager member Domestic partner O Foreign partner 6c Dividend equivalents 7 Royalties H2 D If the partner is a disregarded entity (DE), enter the partner's: TIN Name 11 What type of entity is this partner? Individual 12 If this partner is a retirement plan (IRA/SEP/Keogh/etc.), check 3 here a Partner's share of profit, loss, and capital (see instructions): Net short-term capital gain (loss) 9a Net long-term capital gain (loss) 19 Distributions A 7,360 V 9b Collectibles (28%) gain (loss) Profit Beginning Ending 9c Unrecaptured section 1250 20 Other information. gain X % K Loss Capital X% X % Check if decrease is due to sale or exchange of partnership Interest O Partner's share of liabilities: X % 10 Net section 1231 gain (loss) 2* STMT QBI X% 11 Other income (loss) W-2 wages UBIA Beginning Ending Nonrecourse $ X S x 12 Section 179 deduction 21 Foreign taxes paid or accrued Qualified nonrecourse $ financing Recourse $ $ $ 13 Other deductions A Check this box if Item K includes liability amounts from lower tier partnerships b M N Partner's capital account analysis: Beginning capital account Capital contributed during the year. $ Current year net income (loss) $ Other increase (decrease) (attach $ explanation) Withdrawals & distributions. Ending capital account. $ $ Did the partner contribute property with a built-in gain (loss)? Yes No If "Yes," attach statement. See Instructions. Partner's Share of Net Unrecognized Section 704(c) Gain or (Loss) Beginning capital account. Ending $ For IRS Use Only 22 0 More than one activity for at-risk purposes 23 0 More than one activity for passive activity purposes See attached statement for additional information. For Paperwork Reduction Act Notice, see Instructions for Form 1065. www.irs.gov/Form1065 Cat. No. 11394R Schedule K-1 (Form 1065) 2021