Question

ayden and Hedvig share equally in the profits, losses, and capital of the accrual basis HH LLC. Hayden is the managing member of the LLC (treated as a general partner) and is a U.S. citizen. At the beginning of the current tax year, Hayden's capital account has a balance of $1,420,000, and the LLC has recourse debts of $412,000 payable to unrelated parties. All partnership recourse debt is shared equally between the partners. The following information about HH's operations for the current year is obtained from the entity's records:

Ordinary income	$2.800,000
Interest income from P&G bond	122,000
Long-term capital loss	56,000
Short-term capital gain	110,000
Charitable contribution	36,800
Cash distribution to Hayden	209,000

Year-end LLC debt payable to unrelated parties is $376,000. If all transactions are reflected in his beginning capital and basis in the same manner:

a. Hayden's basis in the LLC interest at the beginning of the year is $.

b. Hayden's basis in the LLC interest at the end of the current year is $.

Answer 1

a) At the beginning of the year :

Capital Account Balance of Hayden, Beginning of the year	$1,420,000
Share of LLC's Debt ($412,000/2)	$206,000
Hayden's basis in the LLC interest at the beginning of the year is $	$1,626,000

b) At the end of the year :

Capital Account Balance of Hayden, Beginning of the year		$1,420,000
Add : Hayden's Share of :
Taxable Income ($2.800,000 x 50%)	$1,400,000
Interest income from P&G bond ($122,000 x 50%)	$61,000
Short-term capital gain (110,000 x 50%)	$55,000	$1,516,000
		$2,936,000
Less :
Long-term capital loss (56000 x 50%)	$28,000
Charitable contribution	$36,800
Cash distribution to Hayden	$209,000	$273,800
		$2,662,200
Add : Share of LLC Debts (376,000/2)		$188,000
Hayden's basis in the LLC interest at the end of the current year is $.		$2,850,200