How much ordinary business income will zoom report

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Q1) Styling Shoes LLC filed its 20X8 Form 1065 on March 15, 20X9. Styling had three members with the following ownership interests and tax basis at the beginning of the 20X8: (1) Jane, a member with a 25% profits and capital interest and a $10,000 outside basis. (2) Joe, a member with a 45% profits and capital interest and a $15,000 outside basis, and (3) Jack, a member with a 30% profits and capital interest and a $7000 outside basis. The following items were reported on Styling's Schedule K for the year: ordinary income of $110,000, Section 1231 gain of $20,000, charitable contributions of $30,000, and tax-exempt income of $8000. In addition, Styling received an additional bank loan of $17,000 during 20X8. What is Jane's tax basis after the adjustment for her share of these items?

a. $37,000

b. $41,250

c. $44,500

d. $71,250

Q2) 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 $20,000 guaranteed payment each year for ongoing services she provides to the LLC. For X4, Bright Line reported the following revenues and expenses: Sales - $140,000, Cost of Good Sold - $80,000, Depreciation Expense - $46,000, Long-Term Capital Gains - $5000, Qualified Dividends - $5000, and Municipal Bond Interest - $3000. How much ordinary business income (loss) will Bright Line allocate to Kim on her schedule K-1 for X4?

a. ($6000)

b. $6000

c. $9000

d. $14,000

e. None of the choices will be reported as ordinary income (loss) on Schedule K-1

Q3) On 12/31/X4, Zoom LLC, reported a $54,000 loss on its books. The items included in the loss computation were $26,000 in sales revenue, $11,000 in qualified dividends, $18,000 in cost of goods sold, $46,000 charitable contribution, $16,000 employee wages, and $11,000 of rent expense. How much ordinary business income (loss) will Zoom report in X4 return?

a. ($8000)

b. ($19,000)

c. ($54,000)

d. ($89,000)

Reference no: EM132762418

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