Question

Connie recently provided legal services to the Winterhaven LLC and received a 5 percent interest in...

Connie recently provided legal services to the Winterhaven LLC and received a 5 percent interest in the LLC as compensation. Winterhaven currently has $50,000 of accounts payable and no other debt. The current fair market value of Winterhaven’s capital is $200,000. (Leave no answer blank. Enter zero if applicable.)

a. If Connie receives a 5 percent capital interest only, how much income must she report and what is her tax basis in the LLC interest?

Income-

Tax Basis-

b. If Connie receives a 5 percent profits interest only, how much income must she report and what is her tax basis in the LLC interest?


Income-

Tax Basis-

c. If Connie receives a 5 percent capital and profits interest, how much income must she report and what is her tax basis in the LLC interest?

Income-

Tax Basis-

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Solution:-

a. If Connie receives a 5 percent capital interest only, how much income must she report and what is her tax basis in the LLC interest:-

Income 10,000
Tax basis 10,000

b. If Connie receives a 5 percent profits interest only, how much income must she report and what is her tax basis in the LLC interest:-

Income 0
Tax basis (50,000 * .05) 2,500

c. If Connie receives a 5 percent capital and profits interest, how much income must she report and what is her tax basis in the LLC interest:-

Income 10,000
Tax basis (10,000 + 2,500) 12,500

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Kim received a 1/3 profits and capital interest in Bright Line, LLC in exchange for legal...
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 $26,000 guaranteed payment each year for ongoing services she provides to the LLC. For X4, Bright Line reported the following revenues and expenses: Sales - $146,000, Cost of Goods Sold - $86,000, Depreciation Expense - $43,000, Long-Term Capital Gains - $11,000, Qualified Dividends - $5,600, and Municipal Bond...
MacKenzie is considering conducting her business, Mac561, as either a single-member LLC or as an S...
MacKenzie is considering conducting her business, Mac561, as either a single-member LLC or as an S corporation. Assume her marginal ordinary income tax rate is 37 percent, her marginal FICA rate on employee compensation is 1.45 percent, her marginal self-employment tax rate is 2.9 percent, and any employee compensation or self-employment income she receives is subject to the 0.9 percent additional Medicare tax. Also, assume Mac561 generated $200,000 of business income before considering the deduction for compensation Mac561 pays to...
4- On January 1, X9, Gerald received his 50 percent profits and capital interest in High...
4- On January 1, X9, Gerald received his 50 percent profits and capital interest in High Air, LLC, in exchange for $3,200 in cash and real property with a $4,200 tax basis secured by a $3,200 nonrecourse mortgage. High Air reported a $16,200 loss for its X9 calendar year. How much loss can Gerald deduct, and how much loss must he suspend if he only applies the tax basis loss limitation? Multiple Choice $0, $16,200. None of the choices are...
In the current year, the DOE LLC received revenues of $300,000 and paid the following amounts:...
In the current year, the DOE LLC received revenues of $300,000 and paid the following amounts: $50,000 of business expenses (rent, utilities, wages, depreciation, etc.), a $50,000 guaranteed payment (for services) to 50% member Dave, $20,000 to member Ethan for consulting services, and $10,000 as a distribution to member Olivia. In addition, the LLC earned $4,000 of tax-exempt interest income during the year. Dave is the managing member of the LLC. Dave’s basis in his LLC interest was $50,000 at...
Kevan, Jerry, and Dave formed Albee LLC. Jerry and Dave each contributed $245,000 in cash. Kevan...
Kevan, Jerry, and Dave formed Albee LLC. Jerry and Dave each contributed $245,000 in cash. Kevan contributed the following assets: Basis Fair Market Value Kevan: Cash $ 15,000 $ 15,000 Land* 120,000 440,000 Totals $ 135,000 $ 455,000 *Nonrecourse debt secured by the land equals $210,000 Each member received a 33.33 percent capital and profits interest in the LLC. (Leave no answer blank. Enter zero if applicable. Do not round intermediate calculations.) g. If the lender holding the nonrecourse debt...
Mackenzie is considering conducting her business, Mac561, as either a single member LLC or as an...
Mackenzie is considering conducting her business, Mac561, as either a single member LLC or as an S corporation. Determine Mackenzie’s after-tax cash flow from the entity’s business income and any compensation she receives from the business assuming her marginal ordinary income tax rate is 37 percent, her marginal FICA rate on employee compensation is 1.45 percent, her marginal self-employment tax rate is 2.9 percent, and any employee compensation or self-employment income she receives is subject to the .9 percent additional...
when high horizon llc was formed, maude contributed the following assets in exchange for a 25...
when high horizon llc was formed, maude contributed the following assets in exchange for a 25 percent capital and profits interest in the llc: maude. basis. fmv cash. 21500. 21500 land. 145500. 405250 non recourse debt secured by the land equals 206000 James, harold, and Jenny each contributed $220,750 in cash for a 25% profits and capital interest. b.what is maudes tax basis in her llc interest? c. what tax basis do James, harold, and jenny have in their llc...
Andrea would like to organize SHO as either an LLC (taxed as a sole proprietorship) or...
Andrea would like to organize SHO as either an LLC (taxed as a sole proprietorship) or a C corporation. In either form, the entity is expected to generate an 11 percent annual before-tax return on a $200,000 investment. Andrea’s marginal income tax rate is 35 percent and her tax rate on dividends and capital gains is 15 percent. Andrea will also pay a 3.8 percent net investment income tax on dividends and capital gains she recognizes. If Andrea organizes SHO...
Sweeney originally contributed $286,000 in cash for a one-fourth interest in the Gilbert LLC. During the...
Sweeney originally contributed $286,000 in cash for a one-fourth interest in the Gilbert LLC. During the several years that Sweeney was a member of the LLC, his share of the LLC’s income was $171,600 and he withdrew $114,400 cash. The LLC’s liabilities are $143,000, of which Sweeney’s share is $35,750. The LLC has $71,500 of hot assets, of which Sweeney’s share is $17,875. Sweeney sells his LLC interest to Jana for $377,520 cash, with Jana assuming Sweeney’s share of the...
Andrea would like to organize SHO as either an LLC (taxed as a sole proprietorship) or...
Andrea would like to organize SHO as either an LLC (taxed as a sole proprietorship) or a C corporation. In either form, the entity is expected to generate an 11 percent annual before-tax return on a $200,000 investment. Andrea’s marginal income tax rate is 35 percent and her tax rate on dividends and capital gains is 15 percent. Andrea will also pay a 3.8 percent net investment income tax on dividends and capital gains she recognizes. If Andrea organizes SHO...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT