I need help where the two red x's are. Please and thank you! Amy and Mitchell share equally in the profits, losses, and capital of the accrual basis AM Products LLC. The LLC does not need to reportfinancial information to any third parties, so capital accounts are determined using tax rules (rather than GAAP). Amy is a managingmember of the LLC (treated as a general partner) and is a U.S. person.At the beginning of the current tax year, Amy's capital account has a balance of $532,000, and the LLC has debts of $345,800 payable tounrelated parties. The debts are recourse to the LLC, but neither of the LLC members has personally guaranteed them. Assume that all LLCdebt is shared equally between the partners. The following information about AM's operations for the current year is obtained from theLLC's records.Operating income*$798,000W-2 wages200,000Depreciation expense300,000Interest income7,980Long-term capital loss5,320Long-term capital gain15,960Charitable contribution (cash)8,030Cash distribution to Amy39,900Unadjusted basis of partnershipdepreciable property immediately after1,600,000acquisition Check if decrease is due to sale or exchange of partnership12 Section 179 deduction20 Other informationAinterest o29,800 x13 Other deductionsZ*STMTKPartner's share of liabilities:A4,015QBI149,000 VBeginningEndingW-2 wagesNonrecourse$172,900 V $121,030100,000 VQualified2$2$UBIAnonrecoursefinancing800,000 VRecourse$2$O Check this box if Item K includes liability amounts from lower14 Self-employment earningstier partnerships.(loss)A149,000 VLPartner's capital account analysis:Beginning capital account......532,000 V21 O More than one activity for at-risk purposes*Capital contributed during the year. .$22 O More than one activity for passive activity purposes*Current year net income (loss).....29,800 x2$*See attached statement for additional information.Other increase (decrease) (attachexplanation)

LLC stands for limited liability company that is a type of partnership. An LLC has at least two…

K L Check if decrease is due to sale or exchange of partnership interest D Partner's share of liabilities: Nonrecourse Qualified nonrecourse financing Recourse $ $ Beginning 172,900 ✔ $ $ Check this box if Item K includes liability amounts from lower tier partnerships. Beginning capital account...... $ Capital contributed during the year. . Current year net income (loss). . . . . Other increase (decrease) (attach explanation) $ $ Partner's capital account analysis: $ $ Ending 121,030 ✓ $ 532,000 29,800 X 12 Section 179 deduction 13 Other deductions A 14 Self-employment earnings A 4,015 ✔ (loss) 149,000 20 Other information A Z* STMT QBI W-2 wages UBIA 29,800 X 149,000 100,000 800,000 ✓ 21 More than one activity for at-risk purposes* 22 More than one activity for passive activity purposes* *See attached statement for additional information.

K L Check if decrease is due to sale or exchange of partnership interest D Partner's share of liabilities: Nonrecourse Qualified nonrecourse financing Recourse $ $ Beginning 172,900 ✔ $ $ Check this box if Item K includes liability amounts from lower tier partnerships. Beginning capital account...... $ Capital contributed during the year. . Current year net income (loss). . . . . Other increase (decrease) (attach explanation) $ $ Partner's capital account analysis: $ $ Ending 121,030 ✓ $ 532,000 29,800 X 12 Section 179 deduction 13 Other deductions A 14 Self-employment earnings A 4,015 ✔ (loss) 149,000 20 Other information A Z* STMT QBI W-2 wages UBIA 29,800 X 149,000 100,000 800,000 ✓ 21 More than one activity for at-risk purposes* 22 More than one activity for passive activity purposes* *See attached statement for additional information.

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter15: Taxing Business Income

Section: Chapter Questions

Problem 27P

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