Morgan Is a 50% Managing Member in the Calendar Year

question 99

Essay

Morgan is a 50% managing member in the calendar year, cash basis MKK LLC.The LLC received $150,000 income from services and paid the following other amounts. $\begin{array}{lc}\text { Rent expense } & \$ 10,000 \\\text { Salary expense to employees } & 40,000 \\\text { Payment to Morgan for services, per the operating agreement } & 40,000 \\\text { Distributions to partners, Kristin and Katie } & 12,000 \\\text { Payment to 30\% cash basis partner Katie for tax and accounting } & 10,000\\\text { services }\end{array}$ ​
How much will Morgan's adjusted gross income increase as a result of the above items? What amount will be included in Morgan's self-employment tax calculation?

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Definitions:

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