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 one of the following shows the information that should be reported on Kristie's Schedule K-1 for the year?

Question

Quizplus · Accepted Answer

Kristie's share of the nonrecourse debt is 25% of $300,000, which is $75,000. Her share of the accounts payable (recourse debt) is 25% of $60,000, which is $15,000. Additionally, she personally guaranteed $50,000, which is considered recourse debt. Therefore, the total is $50,000 recourse debt, $15,000 nonrecourse debt, and $75,000 qualified nonrecourse debt.

Kristie Is a 25% Member in the KLM LLC