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A taxpayer is an active participant in a ge

A taxpayer is an active participant in a ge

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A taxpayer is an active participant in a general partnership with their brother. The taxpayer makes most of the business decisions and gets a guaranteed payment of $2,000 a month. The taxpayer's 1065 K-1 reflects $10,000 business income in box 1, $24,000 in box 4a, $500 in interest in box 5, and $3,000 dividends in box 6a and 6b, all of which are qualified. Is this statement true about how the taxpayer should report these items on their 1040? The $3,000 of dividends should be reported on the 2nd page of Schedule E.
Transcribed Image Text:A taxpayer is an active participant in a general partnership with their brother. The taxpayer makes most of the business decisions and gets a guaranteed payment of $2,000 a month. The taxpayer's 1065 K-1 reflects $10,000 business income in box 1, $24,000 in box 4a, $500 in interest in box 5, and $3,000 dividends in box 6a and 6b, all of which are qualified. Is this statement true about how the taxpayer should report these items on their 1040? The $3,000 of dividends should be reported on the 2nd page of Schedule E.
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