Any Direction LLC LANY) was formed under the laws of the State of Texas on January...

 

 

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Any Direction LLC LANY) was formed under the laws of the State of Texas on January 1, 2020. Harry transferred the following assets and liabilities in exchange for a 50% interest in capital and profits. No special elections were made with respect to entity classifications. Tax Basis Fair Market Value Cash Accounts receivable Goodwill Accounts payable Working Capital Loan S50,000 10,000 -0- 5,000 50,000 $50,000 10,000 35,000 5,000 50,000 Hany had started the business 3 years earlier as a sole proprietorship and was satisfied with the performance to date, but felt he needed to bring in more talent to really unlock the potential of this new business. As such, on January 1, 2020, Harry invited Louis and Liam to join the business, and each contributed $20,000 cash in exchange for a 259% interest in capital and profits. The partners elected Harry to be the partnership representative and in exchange agreed to pay him a service fee of $5,000 per year. The partnership agreement provides that, if eligible, ANY will elect out of the centralized partnership regime. In connection with the formation of ANY, the following expenses were incurred and paid by ANY. Description Legal fees for formation Legal fees to draft LLC Filing fess with Texas Date Paid 1/5/20 1/5/20 1/9/20 Amount $5,000 $25,000 $100 ANYJIS in the business of providing musical production and consulting services to the entertainment industry. ANY is considered a specified service trade or business under IRC 199A ANY elects to use the accrual method of accounting for both book and tax purposes. The partnership filed Form SS-4 and obtained an employer identification number of 13-1122333. The partners share a condo in trendy Midtown at 125 Gray. Houston, Tx 77002. The parters have the following social security mumbers: Hany Styles Louis Tomlinson Liam Payne Niall Horan Zaya Malik 123-45-6789 987-65-4321 345-67-8912 678-90-1234 678-12-3456 On June 30, 2020. the partners decided they needed more capital to run the business, so they admitted Niall as a new 20% partner in exchange for a contribution of S10,000 cash and munical equipment with a tax basis of $5,000 and a fair market value of S10,000. The equipment is depreciable for both book and tax purposes using 5 years straight line. You can ignore the 704(e) allocation of depreciation on the contributed equipment. The partners agree to use the proration method to allocate income berween the partners. The partnership agreement provides for a revaluation of capital account upon the contribution of property (including money) in exchange for a partnersbip interest. Assume the revaluation of the capital accounts is done before considering any current year income allocations to capital. The partnerihip was uncertain whether a song they produced aay have copy right violations, so they acerued a reserve for funure litigation of S10,000. On December 31, 2020 Liam sold 50% of his partnership interest to Zayn for s100,000. The partnership agreemenat provides that a $754 election will be made. The partoership had a great year and made a $300,000 distribution to the partners at 12-31-20 based upon the aumber of days each partner owned his interest during the year times each partner's percentage ownership. dates 1-1-20 to 6-30-20 7-1-20 to 12-31-20 weighted average-proration number of days 181 184 365 partners Harry Louis Liam Nial Zayn total 100% 100% 100% Any Direction LLC LANY) was formed under the laws of the State of Texas on January 1, 2020. Harry transferred the following assets and liabilities in exchange for a 50% interest in capital and profits. No special elections were made with respect to entity classifications. Tax Basis Fair Market Value Cash Accounts receivable Goodwill Accounts payable Working Capital Loan S50,000 10,000 -0- 5,000 50,000 $50,000 10,000 35,000 5,000 50,000 Hany had started the business 3 years earlier as a sole proprietorship and was satisfied with the performance to date, but felt he needed to bring in more talent to really unlock the potential of this new business. As such, on January 1, 2020, Harry invited Louis and Liam to join the business, and each contributed $20,000 cash in exchange for a 259% interest in capital and profits. The partners elected Harry to be the partnership representative and in exchange agreed to pay him a service fee of $5,000 per year. The partnership agreement provides that, if eligible, ANY will elect out of the centralized partnership regime. In connection with the formation of ANY, the following expenses were incurred and paid by ANY. Description Legal fees for formation Legal fees to draft LLC Filing fess with Texas Date Paid 1/5/20 1/5/20 1/9/20 Amount $5,000 $25,000 $100 ANYJIS in the business of providing musical production and consulting services to the entertainment industry. ANY is considered a specified service trade or business under IRC 199A ANY elects to use the accrual method of accounting for both book and tax purposes. The partnership filed Form SS-4 and obtained an employer identification number of 13-1122333. The partners share a condo in trendy Midtown at 125 Gray. Houston, Tx 77002. The parters have the following social security mumbers: Hany Styles Louis Tomlinson Liam Payne Niall Horan Zaya Malik 123-45-6789 987-65-4321 345-67-8912 678-90-1234 678-12-3456 On June 30, 2020. the partners decided they needed more capital to run the business, so they admitted Niall as a new 20% partner in exchange for a contribution of S10,000 cash and munical equipment with a tax basis of $5,000 and a fair market value of S10,000. The equipment is depreciable for both book and tax purposes using 5 years straight line. You can ignore the 704(e) allocation of depreciation on the contributed equipment. The partners agree to use the proration method to allocate income berween the partners. The partnership agreement provides for a revaluation of capital account upon the contribution of property (including money) in exchange for a partnersbip interest. Assume the revaluation of the capital accounts is done before considering any current year income allocations to capital. The partnerihip was uncertain whether a song they produced aay have copy right violations, so they acerued a reserve for funure litigation of S10,000. On December 31, 2020 Liam sold 50% of his partnership interest to Zayn for s100,000. The partnership agreemenat provides that a $754 election will be made. The partoership had a great year and made a $300,000 distribution to the partners at 12-31-20 based upon the aumber of days each partner owned his interest during the year times each partner's percentage ownership. dates 1-1-20 to 6-30-20 7-1-20 to 12-31-20 weighted average-proration number of days 181 184 365 partners Harry Louis Liam Nial Zayn total 100% 100% 100%