Reference no: EM133354069

Questions: PR.10-37.Algo (Algorithmic) d. What tax basis does the LLC take in the property transferred by Shawna? $ e. How could the transaction be restuctured to maximize the tax benefits to Shawna? ? Problem 10-37 (Algorithmic) (LO. 6, 7, 8, 9, 10, 11) Amy and Mitchell share equally (50%) in the profits, losses, and capital of the accrual basis AM Products LLC. Amy is a managing member of the LLC (treated as a general partner) and is a U.S. person. At the beginning of the current tax year, Amy's tax basis capital account has a balance of $720,000, and the LLC has debts of $468,000 payable to unrelated parties. All debts are recourse to the LLC, but neither of the LLC members has personally guaranteed them. The following information about AM's operations for the current year is obtained from the LLC's records. Operating income* $1,080,000 W-2 wages 200,000 Depreciation expense 300,000 Interest income 10,800 Long-term capital loss 7,200 Long-term capital gain 21,600 Charitable contribution (cash) 10,850 Cash distribution to Amy 54,000 Unadjusted basis of partnership property immediately after acquisition 1,600,000 * Operating income equals revenue less operating expenses (other than expenses listed separately above). Year-end LLC debt payable to unrelated parties is $327,600. Assume that all transactions are reflected in Amy's beginning capital and basis in the same manner. Also assume that all AM Products' activities are eligible for the qualified business income deduction.

a. Calculate Amy's basis in her LLC interest at the beginning and end of the tax year. Use her capital account as a starting point. LLC interest at the beginning of the year: $ LLC interest at the end of the year: $ .

b. What income, gains, losses, and deductions does Amy report on her income tax return? If an amount is zero, enter "0". Ordinary income $ Net long-term capital gain $ Interest income $ Charitable contribution deduction $ Cash distribution $