tax problem

| June 9, 2016

Question
Chapter 10- Partnership

Ryan Ross (111-11-1111), Oscar Oleander (222-22-2222), Clark Carey (333-33-3333), and Kim Kardigan (444-44-4444) are equal members in ROCK the Ages, LLC. ROCK serves as agents and managers for prominent musicians in the Los Angeles area. The LLC ’ s Federal ID number is 55-5555555. It uses the cash basis and the calendar year and began operations on January 1, 2001. Its current address is 6102 Wilshire Boulevard, Suite 2100, Los Angeles, CA 90036. ROCK was the force behind such music icons as Rhiannon and Burgundy 5 and has had a very profitable year. The following information was taken from the LLC ’ s income statement for the current year:
Revenues:

Fees and commissions $4,800,000

Taxable interest income from bank deposits 1,600

Tax-exempt interest 3,200 Net gain on stock sales 4,000

Total revenues $4,808,800

Expenses:

Advertising and public relations $ 380,000

Charitable contributions 28,000

Section 179 expense 20,000

Employee salaries and wages 1,000,000

Guaranteed payment, Ryan Ross, office manager 800,000

Guaranteed payment, other members 600,000

Entertainment, subject to 50%disallowance 200,000

Travel 320,000

Legal and accounting fees 132,000

Office rentals paid 80,000

Interest expense on operating line of credit 10,000

Insurance premiums 52,000

Tax Returns: You will prepare 3 tax returns during the semester each one will be worth 100 points. Partial credit will be given on the returns. Please use the appropriate drop box. I do not use the software that comes with the textbook, so don’t send me anything prepared with it. I would visit.irs.gov”>www.irs.gov to find the appropriate forms to use for the returns. You must use tax forms for the tax return problems, failure to do so, will result in massive point deduction.

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