Problem 21-35 (Algorithmic) (LO. 6, 7, 9, 10)

Amy and Mitchell share equally in the profits, losses, and capital of the accrual basis AM Products LLC. The LLC does not need to report financial information to any third parties, so capital accounts are determined using tax rules (rather than GAAP). Amy 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, Amy's capital account has a balance of $596,000, and the LLC has debts of $387,400 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.

Operating income* $894,000 W-2 wages 200,000 Depreciation expense 300,000 Interest income 8,940 Long-term capital loss 5,960 Long-term capital gain 17,880 Charitable contribution (cash) 8,990 Cash distribution to Amy 44,700 Unadjusted basis of partnership depreciable property immediately after acquisition 1,600,000

* Operating income equals revenue less operating expenses (other than expenses listed separately above).

Year-end LLC debt payable to unrelated parties is $271,180. Assume that all transactions are reflected in her beginning capital and basis in the same manner. Also assume that all AM Products' activities are eligible for the qualified business income deduction.

a. Calculate Amy's basis in her LLC interest at the beginning and end of the tax year. Use her capital account as a starting point. LLC interest at the beginning of the year: $fill in the blank d2e96d0f006e01e_1 LLC interest at the end of the year: $fill in the blank d2e96d0f006e01e_2.