At the beginning of the year, Kanye contributed a piece of land (FMV = $300,000; AB = $200,000) in exchange for a 50% capital and profit (and loss) interest in KW Partnership. KW reported the following income and expenses for the current tax year: Sales revenue: $700,000 1231 gain: $60,000 Long-term capital loss: $10,000 Qualified dividends: $10,000 W-2 wages paid to employees: $200,000 Utilities: $140,000 Rent: $180,000 No distributions were made this year. What is Kanye’s 704(b) book capital account balance at the end of the tax year?

At the beginning of the year, Kanye contributed a piece of land (FMV = $300,000; AB = $200,000) in exchange for a 50% capital and profit (and loss) interest in KW Partnership. KW reported the following income and expenses for the current tax year: Sales revenue: $700,000 1231 gain: $60,000 Long-term capital loss: $10,000 Qualified dividends: $10,000 W-2 wages paid to employees: $200,000 Utilities: $140,000 Rent: $180,000 No distributions were made this year. What is Kanye’s 704(b) book capital account balance at the end of the tax year?

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter20: Corporations And Parterships

Section: Chapter Questions

Problem 57P

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Kanye contributed a piece of land (FMV = $300,000; AB = $200,000) in exchange for a 50% capital and profit (and loss) interest in KW Partnership. KW reported the following income and expenses for last tax year: • Sales revenue: $700,000 • 1231 gain: $60,000 • Long-term capital loss: $10,000 • Qualified dividends: $10,000 • W-2 wages paid to employees: $200,000 • Utilities: $140,000 • Rent: $180,000 No distributions were made last year. This year, KW took out a loan. Kanye's allocable share of the partnership liability is $20,000. The partnership intends to pay the entire loan balance off in 3 years with one lump sum payment. Which of the following are accurate? Select all that apply. Kanye's outside basis is increased by $20,000 as a result of the loan Kanye's capital account balance is increased by $20,000 as a result of the loan When the partnership pays off the loan, Kanye's outside basis will decrease by $20,000 When the partnership pays off the loan, Kanye's capital account…
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Ben and Jack Partnership had the following results during the taxable year: Income from operations ($110,000) Loss Capital Gain from Sale of land 25,000 Charitable Contributions 10,000 Kelly, a 50 percent partner, had an adjusted basis of $42,500 at December 31, without regard to the current year income or loss items. In preparing his individual income tax return, Kelly should report which of the following amounts? O a. Ordinary Loss Capital Gain Charitable Contributions $47,500 $12.500 $5,000 O b. Ordinary Loss Capital Gain Charitable Contributions $55,000 $12.500 $5.000 O c. Ordinary Loss Capital Gain Charitable Contributions $40,000 $12,500 $5,000 O d. Ordinary Los Capital Gain Charitable Contributions $50,000 $12,500 $5,000
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Jhumpa, Stewart, and Kelly are all one-third partners in the capital and profits of Firewalker General Partnership. In addition to their normal share of the partnership's annual income, Jhumpa and Stewart each receive an annual guaranteed payment of $10,000 to compensate them for additional services they provide. Firewalker's income statement for the current year reflects the following revenues and expenses: Sales revenue $340,000 Interest income 3,300 Long-term capital gains 1,200 Cost of goods sold (120,000) Employee wages (75,000) Depreciation expense (28,000) Guaranteed payments (20,000) Miscellaneous expenses (4,500) Overall net income $97,000 (Leave no answer blank. Enter zero if applicable.) 1. How much ordinary business income (loss) would Firewalker report for the current year? Ordinary business income (loss)
Jhumpa, Stewart, and Kelly are all one-third partners in the capital and profits of Firewalker General Partnership. In addition to their normal share of the partnership's annual income, Jhumpa and Stewart each receive an annual guaranteed payment of $10,000 to compensate them for additional services they provide. Firewalker's income statement for the current year reflects the following revenues and expenses: Sales revenue $340,000 Interest income 3,300 Long-term capital gains 1,200 Cost of goods sold (120,000) Employee wages (75,000) Depreciation expense (28,000) Guaranteed payments (20,000) Miscellaneous expenses (4,500) Overall net income $97,000 (Leave no answer blank. Enter zero if applicable.) b. How will it allocate these amounts to its partners? (Round your intermediate calculations and final answers to the nearest whole dollar amount.) Description Jhumpa Stewart Kelly…
Jhumpa, Stewart, and Kelly are all one-third partners in the capital and profits of Firewalker General Partnership. In addition to their normal share of the partnership's annual income, Jhumpa and Stewart each receive an annual guaranteed payment of $10,000 to compensate them for additional services they provide. Firewalker's income statement for the current year reflects the following revenues and expenses: Sales revenue $340,000 Interest income 3,300 Long-term capital gains 1,200 Cost of goods sold (120,000) Employee wages (75,000) Depreciation expense (28,000) Guaranteed payments (20,000) Miscellaneous expenses (4,500) Overall net income $97,000 (Leave no answer blank. Enter zero if applicable.) c. How much self-employment tax will each partner pay assuming none has any other source of income or loss? (Round your intermediate calculations and final answers to the nearest whole dollar amount.)…
Hay, Straw, and Clover formed the HSC Partnership, agreeing to share profits and losses equally. Clover will manage the business for which he will receive a guaranteed payment of $30,000 per year. The following tax information is provided: Net income from operations (before guaranteed payment) Guaranteed payment $90,000 $30,000 What is Clover's share of the partnership's ordinary income and guaranteed payment? A) Ordinary income: $20,000; guaranteed payment $30,000 B) Ordinary income: $30,000; guaranteed payment $10,000 C) Ordinary income: $20,000; guaranteed payment $10,000 D) Ordinary income: $30,000; guaranteed payment $30,000
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