Assume that all partnership interests expressed as percentages are those percentages of both profits/losses and capital. Assume that all liabilities are recourse. 6) A. Band C,all individuals, own 30%, 30% and 40%, respectively, of X Corp. A, Band Care all U.S. citizens. Xis a Delaware corporation. Xelects to file SCorp. status on February 1, 2020 and states that the election is effective January 1, 2020. (0) Suppose instead that only A and B consent to the election. Would this change your answer?

Assume that all partnership interests expressed as percentages are those percentages of both profits/losses and capital. Assume that all liabilities are recourse. 6) A. Band C,all individuals, own 30%, 30% and 40%, respectively, of X Corp. A, Band Care all U.S. citizens. Xis a Delaware corporation. Xelects to file SCorp. status on February 1, 2020 and states that the election is effective January 1, 2020. (0) Suppose instead that only A and B consent to the election. Would this change your answer?

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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The AB investment partnership agreement provides for equal sharing of gains or losses from the sale of securities, ordinary taxable income is to be allocated all to A (whose marginal tax rate is 15%) and tax exempt income is to be allocated 20% to A and 80% to B (whose marginal tax rate is 36%). During the year the partnership no capital gain or losses, $20,000 of taxable income from dividends on stock and $20,000 from tax exempt interest on state bonds. (A) Determine the consequences for partner A for each of the above income sources. (B) Determine how your answer in part A would differ, if at all, if the agreement provides 20 % of the ordinary taxable income in partner A is to get all of the tax exempt income and 20% addition to equal division of capital gains and losses.
On January 1, 2021, Bob purchased a 50 percent interest in ABC Partnership (ABC) from Tim by paying Tim $150,000 in cash. During 2021, ABC had ordinary income totaling $180,000 and paid a penalty to the state of Virginia in the amount of $1,000. ABC, which does not have any liabilities, made a distribution to its partners on December 31, 2021 in the total amount of $50,000. The ABC partnership agreement requires all income, gains, and losses to be allocated between Bob and his partner based on ownership interest or 50/50. Required: 1. Calculate Bob's tax basis in ABC partnership interest on December 31, 2021. 2. If Bob sold his entire interest to Jack on January 1, 2022 for $200,000, calculate Bob's gain or loss on the sale assuming that ABC at the time of the sale did not have any "Hot Assets".
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A, B and C decided to form ABC Partnership on January 1, 2022.. . It was agreed that A will contribute an equipment with historical cost of P800,000 and accumulated depreciation of P500,000. On the date of formation, the fair value of equipment was P400,000. B will contribute an automobile with carrying amount of P1,200,000 and fair value of P1,500,000. The automobile is subject to a loan payable amounting to P300,000 to be assumed by the partnership. The partners agreed that C will have to contribute cash equal to half of B's capital. Compute the total capital of the partnership.
A partnership of attorneys in the St. Louis, Missouri, area has the following balance sheet accounts as of January 1, 2021: Assets $ 442,000 Liabilities Athos, capital Porthos, capital Aramis, capital $ 134,000 116,000 106,000 86,000 According to the articles of partnership, Athos is to receive an allocation of 50 percent of all partnership profits and losses, while Porthos receives 30 percent, and Aramis, 20 percent. The book value of each asset and liability should be considered an accurate representation of fair value. For each of the following independent situations, prepare the journal entry or entries to be recorded by the partnership. a. Porthos, with permission of the other partners, decides to sell half of his partnership interest to D'Artagnan for $74,000 in cash. No asset revaluation or goodwill is to be recorded by the partnership. b. All three of the present partners agree to sell 10 percent of each partnership interest to D'Artagnan for a total cash payment of $36,000.…
Partnership(taxation) Assume that all partnership interests expressed as percentages are those percentages of both profits/losses and capital. Assume that all liabilities are recourse. a) Three individuals, C, D, and E, form CDE LLC. CDE LLC does not "check the box" to become a corporation and therefore is treated as a partnership for tax purposes. C contributes land, AB 70 FMV 100 and cash of 20. D contributes inventory (in the hands of both D and CDE), AB 50 FMV 120. E contributes services. In exchange, each partner receives a 1/3 interest in the LLC. What are the consequences to all of the parties? (b) Same as (a) except that C's land is subject to an assumable mortgage of 30 and has a FMV of 130
The condensed statement of financial position of the partnership of Buenaflor and Gangoso as of December 31, 2020 showed the following: Total assets P 200, 000Total liabilities 40, 000Buenaflor, Capital 80, 000Gangoso, Capital 80, 000 On this date, the partnership was dissolved and its net assets transferred to a newly formed corporation.The fair value of the assets was P 24, 000 more than the carrying value on the firm’s books. REQUIRED: Prepare the journal entries in the books of the corporation with P 1 par ordinary share.
After the tangible assets have been adjusted to current market prices, the capital accounts of Grayson Jackson and Harry Barge have balances of $64,900 and $86,500, respectively. Lewan Gorman is to be admitted to the partnership, contributing $43,300 cash to the partnership, for which he is to receive an ownership equity of $50,500. All partners share equally in income. a. Journalize the entry to record the admission of Gorman, who is to receive a bonus of $7,200. If an amount box does not require an entry, leave it blank. Cash Grayson Jackson, Capital Harry Barge, Capital Lewan Gorman, Capital b. What are the capital balances of each partner after the admission of the new partner? Partner Balance Grayson Jackson $ Harry Barge $ Lewan Gorman $
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2. On January 1, 2022, C and D form an equal partnership to which C contributes machinery with a tax basis of (a) $2,000 and a fair market value of (b) $3,000. D contributes cash of (b) $3000 The machinery is being depreciated on a straight-line basis and has a remaining life of five years. The partnership also has ordinary income of (c) $280 A. Using the traditional method, determine the tax basis and Sec. 704(b) book basis depreciation for C and D for Year 1. Depreciation Depreciation Ordinary income Tax Tax C с Book B. Assume, instead, that the basis of the equipment contributed by C is only (d) $800 at the time of contribution. All the other facts are the same. Using the traditional method with curative allocations, determine the tax basis and Sec. 704(b) book basis depreciation for C and D for Year 1. Also, show the allocation of the ordinary income to C and D for the current year. Tax Book D Tax Book D Book
For 2019, the profit of the partnership was reported as P12,500. However, it was 1, 2019, Aglugob was admitted into the partnership with a 10% share in profits, T old partners continue to participate in profits in their original ratio. discovered that the following items were omitted in the firm's books: 2019 For 2019, the profit of the partnership was reported as P12,500. However, it w-an 2018 Unrecorded at year-end P800 Prepaid Expense Accrued Expense P600 700 Unearned Income 500 Accrued Income The new profit and loss ratio for Guillermo, and the share of partner Cumagun in the 2019 profit would be C. 27% and P2,286. 30% and P2,214. а. 27% and P2,214. b. d. 30% and P2,286. 19. Perez, Yuzon and Mercado formed a partnership on Jan. 1, 2019 with the following initial investments: Perez P100,000 Yuzon 150,000 Mercado 225,000 The partnership agreement states that profits and losses are to be shared equally by the partners after consideration is made for the following: Salaries allowed to…
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