Reference no: EM133156279

QuestionS -

Q1) Kim received a 1/3 profits and capital interest in Bright Line, LLC in exchange for legal services she provided. In addition to her share of partnership profits or losses, she receives a $35,000 guaranteed payment each year for ongoing services she provides to the LLC. For X4, Bright Line reported the following revenues and expenses: Sales - $155,000, Cost of Goods Sold - $95,000, Depreciation Expense - $52,000, Long-Term Capital Gains - $20,000, Qualified Dividends - $6,500, and Municipal Bond Interest - $3,500. How much ordinary business income (loss) will Bright Line allocate to Kim on her Schedule K-1 for X4?

Q2) Tom is talking to his friend Bob, who has an interest in Freedom, LLC, about purchasing his LLC interest. Bob's outside basis in Freedom, LLC is $7,000. This includes his $1,900 one-fourth share of the LLC's debt. Bob's 704(b) capital account is $14,000. If Tom bought Bob's LLC interest for $11,000, what would Tom's outside basis be in Freedom, LLC?

Q3) On 12/31/X4, Zoom, LLC reported a $48,000 loss on its books. The items included in the loss computation were $22,000 in sales revenue, $7,000 in qualified dividends, $14,000 in cost of goods sold, $42,000 charitable contribution, $12,000 in employee wages, and $9,000 of rent expense. How much ordinary business income (loss) will Zoom report on its X4 return?

Q4) John, a limited partner of Candy Apple, LP, is allocated $34,500 of ordinary business loss from the partnership. Before the loss allocation, his tax basis is $24,500 and at-risk amount is $14,500. John also has ordinary business income of $24,500 from Sweet Pea, LP as a general partner and ordinary business income of $8,700 from Red Tomato, as a limited partner. How much of the $34,500 loss from Candy Apple can John deduct currently?

Q6) Frank and Bob are equal members in Soxy Socks, LLC. When forming the LLC, Frank contributed $49,000 in cash and $49,000 worth of equipment. Frank's adjusted basis in the equipment was $34,000. Bob contributed $49,000 in cash and $49,000 worth of land. Bob's adjusted basis in the land was $31,000. On 3/15/X4, Soxy Socks sells the land Bob contributed for $61,000. How much gain (loss) related to this transaction will Bob report on his X4 return?

Q7) Erica and Brett decide to form their new motorcycle business as an LLC. Each will receive an equal profits (loss) interest by contributing cash, property, or both. In addition to the members' contributions, their LLC will obtain a $49,000 nonrecourse loan from First Bank at the time it is formed. Brett contributes cash of $4,500 and a building he bought as a storefront for the motorcycles. The building has a FMV of $44,000, an adjusted basis of $29,000, and is secured by a $34,000 nonrecourse mortgage that the LLC will assume. What is Brett's outside tax basis in his LLC interest?

Q8) Sue and Andrew form SA general partnership. Each person receives an equal interest in the newly created partnership. Sue contributes $28,000 of cash and land with a FMV of $73,000. Her basis in the land is $38,000. Andrew contributes equipment with a FMV of $30,000 and a building with a FMV of $51,000. His basis in the equipment is $26,000, and his basis in the building is $38,000. How much gain must the SA general partnership recognize on the transfer of these assets from Sue and Andrew?