Question

At the beginning of the current tax year, Amy's capital account has a balance of $300,000, and the LLC has debts of $200,000 payable to unrelated parties. The debts are recourse to the LLC, but neither of the LLC members has personally guaranteed them. Assume that all LLC debt is shared equally between the partners. The following information about AM's operations for the current year is obtained from the LLC's records.
Ordinary income $400,000
Interest income 4,000
Short-term capital loss 6,000
Long-term capital gain 12,000
Charitable contribution 4,000
Cash distribution to Amy 20,000

Year-end LLC debt payable to unrelated parties is $140,000. If all transactions are reflected in her beginning capital and basis in the same manner.

Required:
Prepare Amy's capital account rollforward from the beginning to the end of the tax year.

Answer 1

Answer:

$477,000

Explanation:

Preparation of Amy's capital account rollforward from the beginning to the end of the tax year.

Capital account balance, beginning of year $300,000

Add Amy's share of:

Taxable income $200,000

($400,000*50%)

Interest income $2,000

($4,000*50%)

Net short-term capital Loss ($3,000)

($12,000-$6,000*50%)

$499,000

Less:

Charitable contribution $2,000

($4,000*59%)

Cash distribution to Amy $20,000

($22,000)

Amy's capital account end of year $477,000

($499,000-$22,000)

Therefore Amy's capital account rollforward from the beginning to the end of the tax year will be $477,000