Kristie is a 25% member in the KLM LLC. At the end of the year, KLM has accounts payable of $60,000 (recourse to the LLC but not guaranteed by the LLC members), and a nonrecourse debt related to real estate of $300,000 (meets the at risk limitation requirements). In addition, Kristie personally guaranteed a $50,000 liability for KLM's equipment purchases. Which of the following indicates the information that should be reported on Kristie's Schedule K-1 for the year?
A) $15,000 recourse debt, $75,000 qualified nonrecourse financing.
B) $90,000 nonrecourse debt.
C) $90,000 nonrecourse debt, $12,500 recourse financing.
D) $65,000 recourse debt, $75,000 qualified nonrecourse financing.
E) $50,000 recourse debt, $15,000 nonrecourse debt, $75,000 qualified nonrecourse financing.

Question

Quizplus · Accepted Answer

Kristie's share of the recourse debt is $15,000 (25% of $60,000), and she personally guaranteed $50,000, making her total recourse debt $65,000. Her share of the nonrecourse debt is $75,000 (25% of $300,000).

Kristie Is a 25% Member in the KLM LLC