tax problem 400171 | Homework Solutions

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 ? HYPERLINK “http://www.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.