GP Partnership, a calendar-year partnership, is owned by Grant Gilbert (60%) and Peter Paulson (40%). At the beginning of 2020, Grant's basis in his GP Partnership interest was $480,000 and Peter's basis in his GP Partnership interest was $320,000. During 2020, GP Partnership had the following items of income and (expense): Gross receipts from sales Cost of goods sold Long-term capital gain Tax-Exempt Interest Advertising expenses MACRS Depreciation Office expenses 2,500,000 (1,200,000) 45,000 7,000 (128,000) (428,000) (75,000) (11,000) 30,000 (109,000) (286,000) Charitable Contribution Qualified dividends income Rent expenses Salaries In addition to the above items, GP Partnership's liabilities decreased by $60,000. Please show your work and explain your calculation for the following questions. a) What is GP Partnership's 2020 ordinary business income or loss and how much of the ordinary income or loss is allocated to Grant and Peter? b) What items of income and expense must GP Partnership separately report and what is Grant and Peter's allocable share of the separately stated items? c) What are Grant's and Peter's outside bases in their GP Partnership interests at the end of 2020?
GP Partnership, a calendar-year partnership, is owned by Grant Gilbert (60%) and Peter Paulson (40%). At the beginning of 2020, Grant's basis in his GP Partnership interest was $480,000 and Peter's basis in his GP Partnership interest was $320,000. During 2020, GP Partnership had the following items of income and (expense): Gross receipts from sales Cost of goods sold Long-term capital gain Tax-Exempt Interest Advertising expenses MACRS Depreciation Office expenses 2,500,000 (1,200,000) 45,000 7,000 (128,000) (428,000) (75,000) (11,000) 30,000 (109,000) (286,000) Charitable Contribution Qualified dividends income Rent expenses Salaries In addition to the above items, GP Partnership's liabilities decreased by $60,000. Please show your work and explain your calculation for the following questions. a) What is GP Partnership's 2020 ordinary business income or loss and how much of the ordinary income or loss is allocated to Grant and Peter? b) What items of income and expense must GP Partnership separately report and what is Grant and Peter's allocable share of the separately stated items? c) What are Grant's and Peter's outside bases in their GP Partnership interests at the end of 2020?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please solve the question with all the sub-divisions and detailed explanation.
Transcribed Image Text:GP Partnership, a calendar-year partnership, is owned by Grant Gilbert (60%) and
Peter Paulson (40%). At the beginning of 2020, Grant's basis in his GP Partnership
interest was $480,000 and Peter's basis in his GP Partnership interest was $320,000.
During 2020, GP Partnership had the following items of income and (expense):
Gross receipts from sales
Cost of goods sold
Long-term capital gain
Tax-Exempt Interest
Advertising expenses
MACRS Depreciation
Office expenses
2,500,000
(1,200,000)
45,000
7,000
(128,000)
(428,000)
(75,000)
(11,000)
30,000
(109,000)
(286,000)
Charitable Contribution
Qualified dividends income
Rent expenses
Salaries
In addition to the above items, GP Partnership's liabilities decreased by $60,000.
Please show your work and explain your calculation for the following questions.
a) What is GP Partnership's 2020 ordinary business income or loss and how much of
the ordinary income or loss is allocated to Grant and Peter?
b) What items of income and expense must GP Partnership separately report and what
is Grant and Peter's allocable share of the separately stated items?
c) What are Grant's and Peter's outside bases in their GP Partnership interests at the
end of 2020?
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VIEWStep 2 a) Statement showing allocation of Income or loss between the partners
VIEWStep 3 a) Answer
VIEWStep 4 b) Statement showing the Income and expenses which are separately report
VIEWStep 5 b.Answer
VIEWStep 6 .c) Outside business Income
VIEWStep 7 c.Answer
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