Required:

Please complete AAA Fast Plumbing's $2024$ tax return based upon the facts presented below. If

required information is missing, use reasonable assumptions to fill in the gaps. Ignore all AMT

calculations and AMT related reporting items.

Facts:

Michael Rodriguez and Devontae Johnson have been life$-$long friends. Both Michael and

Devontae started to work for the same national plumbing repair company immediately after

graduating from technical college. After nearly a decade of working for that same company,

Michael and Devontae decided to venture out on their own and form their own plumbing

company called AAA Fast Plumbing Repair $($AAA$).$ They formed AAA as a limited liability

company $($LLC$).$ Michael and Devontae each own $50\%$ of the company. The company has been

successful primarily based upon reputation and the fact that AAA is available $24$ hours a day,

seven days a week. Although AAA charges a premium for after normal business hour calls,

most of its competitors will not perform services past $9$ p$.$m$.$ and, thus, AAA finds itself often as

one of the only available choices for middle of the night emergencies.

AAA has several employees and because of implementing technology solutions to aid in its call

dispatch program, AAA has been able to expand its service area to now include a three$-$county

area instead of just one.

Information relating to AAA and its owners is as follows:

Members' Information:

Michael Rodriguez

$1515$ West Bloomington Street

Los Angeles, CA $90001$

SSN$-585-31-4060$

Phone: $555-234-8745$

Profit$/$Loss$/$Capital membership interest is $50\%.$

Devontae Johnson

$19$ East Violet Circle

Los Angeles, CA $90001$

SSN: $585-31-6060$

Phone: $555-213-0989$

Profit$/$Loss$/$Capital membership interest is $50\%.$

Other information:

For any 'yes' or $\text{'}$no$\text{'}$ questions on Schedule B$,$ assume the answer is $\text{'}$no$\text{'}$ unless explicitly stated

in the facts below.

AAA is a domestic limited liability company.

Michael and Devontac are U$.$S$.$ citizens and are not related, each owning $50\%$ of the

LLC$.$

Both Michael and Devontac are managing members.

All of AAA's activities constitute a qualified trade or business, and the salaries and

wages expense from the income statement is the same as $W-2$ wages paid by AAA in

The total unadjusted basis for all assets placed in service for the prior $10$ years matches

the book value of all assets reported on the balance sheet.

Michacl is the Partnership Representative and AAA is not electing out of the centralized

partnership andit regime

Both Michael and Devontac are active in the business and work full$-$time for AAA.

The debt owed to Fist National Bank is a non$-$recourse obligation and neither Michael

nor Devontae have guaranteed its repayment $($see balance sheet below$).$ This debt is not

directly tied to any specific asset but is rather a debt secured against all of the assets of

the company.

During the year, Michael and Devontac each contributed $$20,000$ to the capital of AAA.

AAA makes the de minimis safe harbor election under the Tangible Property Regs

AAA does not maintain any inventory. AAA purchases supplies and has a policy of

expensing such purchases as paid for tax and book purposes consistent with existing tax

law.

AAA uses MACRS depreciation for both tax and book purposes.

During the year, Michael and Devontac each received a $$75,000$ distribution from AAA.

During the year. AAA acquired the following assets $($all assets were placed in service on

the acquisition dates as indicated below$)$:

Service vans$-$new $($not Luxury Automobiles$)$ July $1,2024$$$500,000$

Plumbing machinery$/$equipment$-$new July $1,2024$ $$250,000$

AAA will claim Section $179$ expense for any of the current year asset purchased in the

current year.

AAA's tax depreciation on assets acquired in tax years prior to $2024$ is $$102,813.$

AAA Plumbing, HLC

Batance Sheet$-$GAAP Basis

December $31,2024$

$\frac{12}{31}\frac{?}{2023}$

$\frac{12}{31}\frac{?}{2024}$

Assets:

Cash

Tax$-$exempt Securities

Building

Less: Acc. Depreciation

Equipment

Less: Acc. Depreciation

Land

Total Assets:

Liabilities and Capital:

Note Payable$-$First National Bank

Note Payable$-$Michael Rodriguez

Note Payable$-$Devontae Johnson

Capital Account$-$MR

Capital Account$-$DJ

Total Liabilities and Capital:

$$4,267,318$

$300,000$

$200,000$

$$4,046,673$

$300,000$

$200,000$

$481,416$

$481,416$

$$5,597,318$

$$5,509,505$

Member Capital Accounts $($Tax Basis$)$

$\backslash$table$[[,\frac{12}{31}\frac{?}{2023},\frac{12}{31}\frac{?}{2024}$