Al, Bob and Cam form an equal partnership as a limited liability company, ABC, LLC, where they are all entitled to one-third of all income and loss from the operations of the business. The business had the following transactions in the first year:

Operating Item Separately Stated Item

Revenues $1,650,000 _____ ______

Gain on Sale of Land $52,000 _____ ______

Interest Income $8,000 _____ ______

Returns $50,000 _____ ______

Employee Salaries $150,000 _____ ______

Partner Salary (Bob) $100,000 _____ ______

Cost of Goods Sold $800,000 _____ ______

Rent $100,000 _____ ______

MACRS Depreciation $45,000 _____ ______

Section 179 Deduction $60,000 _____ ______

Interest Expense $15,000 _____ ______

Contribution to United Way $5,000 _____ ______

Identify each of the above transactions as either 

(i) a transaction affecting the company’s ordinary business income (loss), or 

(ii) a separately stated item. The gain on the sale of the land sold for $112,000 that had a basis of $60,000. The land was a capital asset and it was contributed by Al in an IRC 721 transaction at the beginning of the year when the FMV was $100,000 after Al had held the land as a capital asset for 5 years. The contribution to the United Way is a cash charitable donation to a 501(c)(3) public charity. Once you have categorized each of the transactions above,

Answer rating: 100% (QA)

Operating Item Separately Stated Item Revenues 1650000 Gain on Sale of Land 52000 Intere... View the full answer