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 $LLC(treatedas$ a general partner$)$ and $isaU.S.$ person.

$At$ the beginning $of$ the current tax year, Amy's tax basis capital account has a balance $of$ $$524,000,$ and the $LLC$ has debts $of$ $$340,600$ 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.

Operating income$*$$$786,000W-2$ wages$200,000$Depreciation expense$300,000$Interest income$7,860$Long$-$term capital loss$5,240$Long$-$term capital gain$15,720$Charitable contribution $(cash)7,910$Cash distribution $to$ Amy$39,300$Unadjusted basis $of$ partnership property immediately after acquisition$1,600,000$

$*$ Operating income equals revenue less operating expenses $(other$ than expenses listed separately above$).$

Year$-$end $LLC$ debt payable $to$ unrelated parties $is$ $$238,420.$ 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.

Question Content Area

$a.$ Calculate Amy's basis $in$ her $LLC$ interest $at$ the beginning and end $of$ the tax year. Use her capital account $as$ a starting point.

$LLC$ interest $at$ the beginning $of$ the year:

$LLC$ interest $at$ the end $of$ the year: