Ming and Denise, mother and daughter, operate a local restaurant as an LLC. The MD LLC earned a profit of $200,000 in the current year. Denise’s equal partnership interest was acquired by gift from Ming. Assume that capital is a material income-producing factor and that Ming manages the day-to-day operations of the restaurant without any help from Denise. Reasonable compensation for Ming’s services is $50,000.

a. How much of the LLC’s income is allocated to Ming?

b. What is the maximum amount of the LLC’s income that can be allocated to Denise?

c. Assuming that Denise is 15 years old, has no other income, and is a dependent of Ming, how is Denise’s income from the LLC taxed?