Carlyle, LLC is a partnership with 4 partners. Each has an equal 25% interest. The partnership’s balance sheet at the beginning of the year is posted below. Assume all partnership assets were purchased by the partnership (i.e., there is no sec. 704(c) contributed property). During the current year, the partnership had the following transactions: Description Amount Gross receipts $568,750 Cost of goods sold $253,750 Salaries $70,000 Sale of computer equipment on Jan. 1 of the current year (computer equipment was originally purchased by Carlyle, LLC two years ago for $70,000. Accumulated depreciation = $28,000. No depreciation on the equipment is permitted in the current year). Sales Price = $65,625 cash Sale of Ranch Sales Price = $122,500 cash + Buyer’s assumption of the mortgage Carlyle, LLC Tax Balance Sheet (Beginning of year) Book Tax Book Tax Comp. Equipment 42,000 42,000 Mortgage 35,000 35,000 Cash 211,750 211,750 Inventory 131,250 131,250 Rhiannon 122,500 122,500 Ranch 140,000 140,000 Tanner 122,500 122,500 Jim 122,500 122,500 Darius 122,500 122,500 What amount will appear in Box 1 (“Ordinary Business Income”) of Rhiannon’s K-1 for the current year? Does the partnership have any separately stated items? If so, what? What is Rhiannon’s share? What is Rhiannon’s tax capital account at the end of the year?

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter21: Partnerships

Section: Chapter Questions

Problem 38P

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Question

Carlyle, LLC is a partnership with 4 partners. Each has an equal 25% interest. The partnership’s balance sheet at the beginning of the year is posted below. Assume all partnership assets were purchased by the partnership (i.e., there is no sec. 704(c) contributed property).

During the current year, the partnership had the following transactions:

Description	Amount
Gross receipts	$568,750
Cost of goods sold	$253,750
Salaries	$70,000
Sale of computer equipment on Jan. 1 of the current year (computer equipment was originally purchased by Carlyle, LLC two years ago for $70,000. Accumulated depreciation = $28,000. No depreciation on the equipment is permitted in the current year).	Sales Price = $65,625 cash
Sale of Ranch	Sales Price = $122,500 cash + Buyer’s assumption of the mortgage

Carlyle, LLC Tax Balance Sheet (Beginning of year)
	Book	Tax		Book	Tax
Comp. Equipment	42,000	42,000	Mortgage	35,000	35,000
Cash	211,750	211,750
Inventory	131,250	131,250	Rhiannon	122,500	122,500
Ranch	140,000	140,000	Tanner	122,500	122,500
			Jim	122,500	122,500
			Darius	122,500	122,500