Practice Test 3

CD LLC is a multi-member limited liability company that began operations in Year 1 and did not file Form 8832 to elect corporate treatment. The LLC has two members: C (60%) and D (40%), and the operating agreement allocates all ordinary income 50/50 regardless of ownership percentage. The LLC generated $200,000 of ordinary business income in Year 1 and no special allocations were supported by substantial economic effect. How should the $200,000 be allocated for federal tax purposes under the partnership allocation rules of Internal Revenue Code section 704(b)?

GH LLC is a domestic multi-member LLC with two members and no election to be treated as a corporation. The LLC began business on March 1, Year 1 and had $150,000 of ordinary business income for Year 1. Which federal filing and recipient statement requirement applies for Year 1 under the partnership reporting rules?