Financial Account A review of Bearing's Year 2 records disclosed the following taxinformation:Wages $20,000; Taxable interest and qualifying dividends 4,000;Schedule C trucking business net income 32,000; Rental (loss) fromresidential property (35,000); Limited partnership (loss) (5,000); Bearingactively participated in the rental property and was a limited partner in thepartnership. The bearing had sufficient amounts at risk for the rentalproperty and the partnership.Required:What is Bearing's Year 2 adjusted gross income?

To determine Bearing's Adjusted Gross Income (AGI), we calculate taxable income by considering all…

Answered: A review of Bearing's Year 2 records…

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter21: Partnerships

Section: Chapter Questions

Problem 3BCRQ

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A business entity's taxable income before the cost of certain fringe benefits paid to owners and other employees is $41,600. The amounts paid for these fringe benefits are reported as follows. Note the following: (1) Assume the fringe benefit plans are not discriminatory and (2) The business entity is equally owned by three owners. Owners Other Employees Group term life insurance $4,400 $7,270 Lodging incurred for the convenience of the employer 2,930 4,680 Qualified retirement plan 2,500 5,620 a. Calculate the taxable income of the business entity if the entity is a partnership, a C corporation, and an S corporation. The taxable income of the business entity, if it is a partnership, is $____________. If the entity is a C corporation, it is $_______________, and if the entity is an S corporation, it is $_____________.
Kim received a 1/3 profits and capital interest in Bright Line, LLC in exchange for legal services she provided. In addition to her share of partnership profits or losses, she receives a $22,000 guaranteed payment each year for ongoing services she provides to the LLC. For X4, Bright Line reported the following revenues and expenses: Sales - $142,000, Cost of Goods Sold - $82,000, Depreciation Expense - $41,000, Long-Term Capital Gains - $7,000, Qualified Dividends - $5,200, and Municipal Bond Interest - $3,200. How much ordinary business income (loss) will Bright Line allocate to Kim on her Schedule K-1 for X4? Multiple Choice ($3,000). $10,600. $13,800. $19,000. None of the choices will be reported as ordinary business income (loss) on Schedule K-1.
Georgio owns a 30 percent profits and capital interest in Rain Tree LLC. For the current year, Rain Tree had the following revenues, expenses, gains, and losses: Sales revenue Gain on sale of land (§1231) Cost of goods sold Depreciation-MACRS §179 deduction* Employee wages Nondeductible fines and penalties Municipal bond interest Short-term capital gains Guaranteed payment to Sandra $ 82,750 $ 18,400 $(49,250) $ (5,950) $(18,900) $(12,300) $ (3,200) $ 6,500 $ 5,100 $ (3,950) *Assume the $179 property placed in service limitation does not apply. a. How much ordinary business income (loss) is allocated to Georgio for the year? Description Total Amount Allocated to Georgio Sales Revenue Ordinary Business Income
ABC LLC, a calendar year partnership, incurred $8, 600 of organizational costs and $10,000 of syndication costs before the active business began on July 1, Year 1. How much can ABC LLC deduct on its initial - year return?
Required: 1. Williamson, LLC, paid insurance premiums of $6,720 on December 1, 20X1. These premiums covered a two-year period beginning on that date. What amount, from this payment, should the corporation show as insurance expense for the year 20X1? 2. Taylor Moore buys and sells real estate. On December 31, 20X1, her inventory of property included a tract of undeveloped land for which she had paid $945,000. The fair market value of the land was $1,045,000 at that date. How much income should Moore report for 20X1 in connection with this land? 3. Madison Building Company signed a contract with a customer on November 1, 20X1. The contract called for construction of a building to begin by December 31, 20X1, and to be completed by December 31, 20X2. The contract price was $9.9 million. Madison estimated that the building would cost $6.9 million. On November 15, 20X1, the customer was required to make an advance payment of $1,045,000. No work was done on the project until January 20X2. How…
Z owns a rental building (its only asset) with a gross fair market value of $5,000 subject to the non-recourse mortgage of $2,000. Z’s adjusted basis for this building is $1,500. All of Z’s stock is owned by C, whose basis for his stock in Z is $500. Z had 1,000 of E&P. Z is on the accrual method of accounting and reports on the calendar year. Assume that the corporate tax payable by Z on $3,500 gained is $735 and on $3,000 gained is $630. Z sells the building, subject to the mortgage, to D in the current year for $3,000 in cash. Z then liquidates, distributing all of the cash (remaining after paying its taxes) to C in cancellation of C’s stock in the current year. a. Z’s gain on the sale of the building is $1,500. b. Z’s E&P goes over to purchaser, D, if D is a corporation. c. Section 331 treats C as selling its stock to Z. d. None of the above
1. George operates a business that generated revenues of $50 million and allocable taxable income of $560,000. Included in the computation of allocable taxable income were $900,000 of business interest expense, $20,000 of business interest income, and $180,000 of depreciation. What is the maximum business interest deduction that George will be eligible to claim this year if the business does not qualify under the gross income test? a) $168,000 b) $560,000 c) $612,000 d) $452,000 2. Mike started a calendar-year business on September 1stSeptember 1st of this year by paying 12 months of rent on his shop at $550 per month. What is the maximum amount of rent that Mike can deduct this year under each type of accounting method? a) $6,600 under the cash method and $6,600 under the accrual method b) $6,600 under the cash method and $2,200 under the accrual method c) $2,200 under the cash method and $2,200 under the accrual method d) $2,200 under the cash method and zero under the…
Subject: acounting
George operates a business that generated revenues of $61 million and allocable taxable income of $1.36 million. Included in the computation of allocable taxable income were deductible expenses of $245,500 of business interest and $255,500 of depreciation. What is the business interest limitation that George will be subject to this year if the business does not qualify under the gross income test?
Firm B, a calendar year, cash basis taxpayer, leases lawn and garden equipment. During December, it received the following cash payments. To what extent does each payment represent current taxable income to Firm 8? Required: a. $522 repayment of a loan from an employee. Firm B loaned $500 to the employee six months ago, and the employee repaid the loan with interest. b. $600 deposit from a customer who rented mechanical equipment. Firm B must return the entire deposit when the customer returns the undamaged equipment. c. $10,000 short-term loan from a local bank. Firm B gave the bank a written note to repay the loan in one year at 5 percent interest. d. $888 prepaid rent from the customer described in part (b). The rent is $12 per day for the 74-day period from December 17 through February 28.
Respond to the following independent situations: Required: a. Mario and Tricia, husband and wife, filing jointly, earn $30o0,000 in salaries and do not have any net investment income. b. Mario and Tricia, husband and wife, filing jointly, earn $214,500 in salaries and $50,000 in capital gains, $50,000 in dividends, and $25,000 in savings interest for a total modified AGI of $339,50o. c. Mario and Tricia, husband and wife, filing jointly, earn $336,000 in salaries and $56,000 in capital gains for a total modified AGI of $392,000. How much in surtax will Mario and Tricia be assessed on their Form 1040 for 2020? Amount of surtax a. b. C.
Ashanti Partnership, a mining equipment business, states in its partnership agreement that Jonah and Tutu agree to split profits and losses according to a 40/60 ratio. Additionally, the partnership will provide Jonah with a $15,000 guaranteed payment for services he provides to the partnership. Ashanti Partnership reports the following revenues, expenses, gains, losses, and distributions for its current taxable year: Gain on Sale of Land* $ 4,000 MACRS Depreciation $ 7,500 Charitable Contributions $ 12,500 Sales $ 40,000 Interest Income $ 500 Cost of Goods Sold $ 32,000 Section 179 Expense $ 7,000 Tax-Exempt Income $ 2,000 Other Income $ 5,000 *The land is a Section 1231 asset.Answer the following questions:A. Compute Jonah's share of ordinary income (loss) and separately stated items. Include his self-employment income as a separately stated item.B. Compute Jonah's self-employment income but assume Ashanti Partnership is a limited partnership and Jonah is a…

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