Note: This problem is for the 2020 tax year.

Ryan Ross (111-11-1112), Oscar Omega (222-22-2223), Clark Carey (333-33-3334), and Kim Kardigan (444-44-4445) are equal active members in ROCK the Ages LLC. ROCK serves as agents and managers for prominent musicians in the Los Angeles area. The LLC's Federal ID number is 55-5555556. It uses the cash basis and the calendar year and began operations on January 1, 2008. Its current address is 6102 Wilshire Boulevard, Suite 2100, Los Angeles, CA 90036. ROCK was the force behind such music icons as Adrianna Venti, Drake Malone, Elena Gomez, Tyler Quick, Queen Bey, and Bruno Mercury and has had a very profitable year. The following information was taken from the LLC's income statement for the current year.

Revenues
Fees and commissions	$4,800,000
Taxable interest income from bank deposits	1,600
Tax-exempt interest	3,200
Net gain on stock sales	4,000
Total revenues	$4,808,800
Expenses
Advertising and public relations	$380,000
Charitable contributions	28,000
Section 179 expense	20,000
Employee salaries and wages	1,000,000
Guaranteed payment (services), Ryan Ross, office manager	800,000
Guaranteed payment (services), other members	600,000
Business meals, subject to 50% disallowance	200,000
Travel	320,000
Legal and accounting fees	132,000
Office rentals paid	80,000
Interest expense on operating line of credit	10,000
Insurance premiums	52,000
Office expense	200,000
Payroll taxes	92,000
Utilities	54,800
Total expenses	$3,968,800

Recently, ROCK has taken advantage of bonus depreciation and 179 deductions and fully remodeled the premises and upgraded its leasehold improvements. This year, ROCK wrapped up its remodel with the purchase of $20,000 of office furniture for which it will claim a 179 deduction. (For simplicity, assume that ROCK uses the same cost recovery methods for both tax and financial purposes.) There is no depreciation adjustment for alternative minimum tax purposes.

ROCK invests much of its excess cash in non-dividend-paying growth stocks and tax-exempt securities. During the year, the LLC sold two securities. On June 15, 2020, ROCK purchased 1,000 shares of Tech, Inc., stock for $100,000; it sold those shares on December 15, 2020, for $80,000. On March 15, 2019, ROCK purchased 2,000 shares of BioLabs, Inc., stock for $136,000; it sold those shares for $160,000 on December 15, 2020. These transactions were reported to the IRS on Forms 1099B; ROCK's basis in these shares was reported.

Net income per books is $840,000. On January 1, 2020, the members' capital accounts equaled $200,000 each. No additional capital contributions were made in 2020. In addition to their guaranteed payments, each member withdrew $250,000 cash during the year. All contributions and distributions have been in cash, so the LLC has no net unrecognized 704(c) gain or loss. The LLC's balance sheet as of December 31, 2020, is as follows.

	Beginning		Ending
Cash	$444,000		$??
Tax-exempt securities	120,000		120,000
Marketable securities	436,000		300,000
Leasehold improvements, furniture, and equipment	960,000		980,000
Accumulated depreciation	(960,000)		(980,000)
Total assets	$1,000,000		$??
Operating line of credit	$200,000		$160,000
Capital, Ross	200,000		??
Capital, Omega	200,000		??
Capital, Carey	200,000		??
Capital, Kardigan	200,000		??
Total liabilities and capital	$1,000,000		$??

The firm's activities do not constitute "qualified production activities" for purposes of the 199 deduction. (Note that the 179 deduction is a business-related expense.) The LLCs UBIA (unadjusted basis immediately after acquisition) equals the total original cost of all leasehold improvements, or $980,000.

All debt is shared equally by the members. Each member has personally guaranteed the debt of the LLC. All members are active in LLC operations. The business code for the entity is 711410. Complete the 2020 Form 1065 for ROCK the Ages LLC with appropriate forms and schedules. Prepare Schedule K1 for Ryan Ross.

• If an amount box does not require an entry or the answer is zero, enter "0".
• Enter all amounts as positive numbers, unless otherwise instructed.
• If required, round amounts to the nearest dollar.
• Make realistic assumptions about any missing data.

2020 Department of the Treasury Internal Revenue Service (99) (Including Information on Listed Property) Attach to your tax return. Go to www.irs.gov/Form4562 for instructions and the latest information. Attachment Sequence No. 179 Name(s) shown on return ROCK the Ages LLC Identifying number 55-5555556 Business or activity to which this form relates Form 1065 Part I Election To Expense Certain Property Under Section 179 Note: If you have any listed property, complete Part V before you complete Part I 1 Maximum amount (see Instructions) 1 500,000 x 2 Total cost of section 179 property placed in service (see instructions) 2 20,000 3 Threshold cost of section 179 property before reduction in limitation (see Instructions) 3 2,000,000 X 4 , Reduction in limitation. Subtract line 3 from line 2. If zero or less, enter -o- . 4 0 5 Dollar limitation for tax year. Subtract line 4 from line 1. If zero or less, enter-O-. If married filing separately, see instructions... 5 500,000 X 6 (a) Description of property (b) Cost (business use only) (c) Elected cost Office Furniture 20,000 20,000 7 Listed property. Enter the amount from line 29 7 0 8 Total elected cost of section 179 property. Add amounts in column (C), lines 6 and 7 8 20,000 9 Tentative deduction. Enter the smaller of line 5 or line 8. 9 20,000 10 Carryover of disallowed deduction from line 13 of your 2019 Form 4562 10 0 Business income limitation. Enter the smaller of business income (not less than zero) or line 5. See instrs . 11 500,000 X 12 Section 179 expense deduction. Add lines 9 and 10, but don't enter more than line 11 12 20,000 13 Carryover of disallowed deduction to 2021. Add lines 9 and 10, less line 12 13 Instructions Form 1065 Form 8949 Schedule D Form 4562 Federal Statements Schedule K-1 Statement A-QBI Pass-through Entity Reporting Statement A-QBI Pass-through Entity Reporting Complete Statement A-QBI Pass-through Entity Reporting (Schedule K-1, Box 20, Code Z) for ROCK the Ages LLC. Statement A-QBI Pass-through Entity Reporting (Schedule K-1, Box 20, Code Z) Partnership's EIN: 55-5555555 Partnership's name: ROCK the Ages LLC Partner's name: Ryan Ross Partner's identifying number: 111-11-1112 ROCK the Ages LLC Aggregated SSTB Aggregated SSTB O PTP Aggregated O SSTB Partner's share of: QBI or qualified PTP items subject to partner-specific determinations: Ordinary business Income (loss) 831,200 x Rental income (loss) ......... Royalty Income (loss) ........ Section 1231 galn (loss)...... Other Income (loss).......... Section 179 deduction........ 20,000 X Charitable contributions Cash, 60% 16,800 x Other deductions. W-2 wages.... 908,000 X x UBIA of qualified property. 980,000 X Section 199A dividends