Seeley and Swan share equally in the profits, losses, and capital of the accrual
ID: 2551110 • Letter: S
Question
Seeley and Swan share equally in the profits, losses, and capital of the accrual basis SS LLC. SS Products LLC. Seeley is a managing member of the LLC (treated as a general partner) and is a U.S. person. At the beginning of the current year, Seeley's capital account has a balance of $815,000 and the LLC has debts of $192,000 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 recourse debt is shared equally between the partners. The following information about SS's operations for the current year is obtained from the LLC's records:
Ordinary income $1,400,000 Interest income 42,000 Short-term capital loss 16,000 Long-term capital gain 59,000 Charitable contribution 12,000 Cash distribution to Seeley 62,000 Year-end LLC debt payable to unrelated parties is $120,000.
If all transactions are reflected in her beginning capital and basis in the same manner, what is Seeley's basis in her LLC interest:
a. Seeley's basis in the LLC interest at the beginning of the year is $_________.
b. Seeley's basis in the LLC interest at the end of the year is $ _________.
Explanation / Answer
Answer
A.
Seeley's basis in the LLC interest at the beginning of the year:
B.
Seeley's basis in the LLC interest at the end of the year
Capital account balance, beginning of year $815000 Share of AM's debt ($192,000 × 1/2) $96000 Seeley's basis, beginning of year $911000