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 $$300,000,$ and the LLC has debts of $$200,000$ 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$\text{'}$s records.

Sales revenues $$1,400,000$

Other $$ordinary and necessary$$ operating expenses $($e$.$g$.,$ utilities, repairs, and rent$)500,000$

W$2$ wages to employees $200,000$

Depreciation expense $300,000$

Interest income $4,000$

Long$-$term capital gain $6,000$

Charitable contribution $($cash$)4,000$

Cash distribution to Amy $20,000$

Unadjusted basis of partnership property immediately after acquisition $1,600,000$

Year$-$end LLC debt payable to unrelated parties is $$140,000.$

Assume that all transactions are reflected in Amy's beginning capital and basis in the same manner. All AM Products' activities are eligible for the qualified business income deduction.

Question Content Area

a$.$ Calculate Amy's basis in her LLC interest at the beginning and end of the tax year.

LLC interest at the beginning of the year: $fill in the blank $9$d$5074$f$9703$c$004\_1$

$400,000$

LLC interest at the end of the year: $fill in the blank $9$d$5074$f$9703$c$004\_2$

$553,000$

Question Content Area

b$.$ What income, gains, losses, and deductions does Amy report on her income tax return?

If an amount is zero, enter $"0".$

Ordinary income $fill in the blank $76$e$383$fe$4$fb$0$fbe$\_1$

Net long$-$term capital gain $fill in the blank $76$e$383$fe$4$fb$0$fbe$\_2$

Interest income $fill in the blank $76$e$383$fe$4$fb$0$fbe$\_3$

Charitable contribution deduction $fill in the blank $76$e$383$fe$4$fb$0$fbe$\_4$

Cash distribution $fill in the blank $76$e$383$fe$4$fb$0$fbe$\_5$

Question Content Area

c$.$ Based on the information provided, what other calculations is Amy required to make?

Amy may be eligible to deduct up to fill in the blank $674$f$15056$f$8$b$077\_1$

$\%$ of the ordinary income as qualified business income under $199$A and will make that calculation on her return. This deduction

does

require a cash outflow by Amy or the LLC$,$ and it

does

affect her basis or capital account. As someone treated as a general partner, Amy's distributive share of the LLC$\text{'}$s ordinary business income

is

subject to self$-$employment tax and possibly the additional Medicare tax. Her

ordinary income

from the LLC may be subject to the additional tax under $1411.$

Question Content Area

d$.$ Prepare Amy's tax basis capital account roll forward from the beginning to the end of the tax year. How does her ending capital account differ from her ending tax basis in the LLC interest as calculated in part $($a$)?$

Capital account balance, beginning year $fill in the blank $5$e$4804004$fc$6035\_1$

Ordinary income $fill in the blank $5$e$4804004$fc$6035\_2$

Interest income fill in the blank $5$e$4804004$fc$6035\_3$

Net long$-$term capital gain fill in the blank $5$e$4804004$fc$6035\_4$

fill in the blank $5$e$4804004$fc$6035\_5$

$fill in the blank $5$e$4804004$fc$6035\_6$

Less:

Charitable contribution $fill in the blank $5$e$4804004$fc$6035\_7$

Cash distribution to Amy fill in the blank $5$e$4804004$fc$6035\_8$

fill in the blank $5$e$4804004$fc$6035\_9$

Capital account balance, end of year $fill in the blank $5$e$4804004$fc$6035\_10$

Amy's capital account differs from her basis only by the amount of her share of LLC

$.$

Question Content Area

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$\text{'}$s tax return. Provide all information that Amy needs to the extent you can.

Enter all amounts as positive numbers.