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

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

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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6a.Harry and Sally formed the Evergreen partnership by contributing the following assets in exchange for a 50 percent capital and profits interest in the partnership: Basis Fair Market Value Harry: Cash $ 30,000 $ 30,000 Land 100,000 120,000 Totals $ 130,000 $ 150,000 Sally: Equipment used in a business 200,000 150,000 Totals $ 200,000 $ 150,000 What is Evergreen’s tax basis in its assets?
Kim received a 1/3 profits and capital interest in Bright Line, LLC in exchange for legal services she provided. In addition to her share of partnership profits or losses, she receives a $22,000 guaranteed payment each year for ongoing services she provides to the LLC. For X4, Bright Line reported the following revenues and expenses: Sales - $142,000, Cost of Goods Sold - $82,000, Depreciation Expense - $41,000, Long-Term Capital Gains - $7,000, Qualified Dividends - $5,200, and Municipal Bond Interest - $3,200. How much ordinary business income (loss) will Bright Line allocate to Kim on her Schedule K-1 for X4? Multiple Choice ($3,000). $10,600. $13,800. $19,000. None of the choices will be reported as ordinary business income (loss) on Schedule K-1.
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Cheryl and Joseph formed a partnership. Cheryl received a 50% interest in partnership capital and profits in exchange for contributing land with a basis of $140,000 and a fair market value of $300,000. Joseph received a 50% interest in partnership capital and profits in exchange for contributing $300,000 of cash. Three years after the contribution date, the land contributed by Cheryl is sold by the partnership to a third party for $380,000. How much taxable gain will Cheryl recognize from the sale? a) $40,000 b) $120,000 c) $160,000 d) $200,000 e) None of the above
Singer and McMann are partners in a business. Singer's original capital was $43,200 and McMann's was $52,800. They agree to salaries of S10,500 and $18,000 for Singer and McMann, respectively, and 10% interest on original capital. If they agree to share the remaining profits and losses in a 3:2 ratio, what will Singer's share of the income be if the income for the year is $66,600? Oa. S10,500 Ob. $14,820 Oc. $31,920 Od. S39,960
Jason is a 50% partner in Shadow Lake Partnership. Jason's tax basis in Shadow Lake on January 1 was $40,000. During the year, Shadow Lake reported net ordinary income of $100,000 and tax exempt income of $10,000. In addition, Shadow Lake distributed $30,000 to each of the partners ($60,000 total). At the end of the tax year, Jason's share of partnership liabilities increased by $20,000. What is Jason's basis in the partnership interest at the end 20207 Answer:
Zoey contributed land with a tax basis of $45,000 and a fair market value of $100,000 in exchange for a 20% percent interest in the new formed ZAT Partnership. All other partners contributed cash and ZAT partnership has no liabilities. What is Zoey’s basis in her partnership interest in ZAT Partnership?
Zoey contributed land with a tax basis of $45,000 and a fair market value of $100,000 in exchange for a 20% percent interest in the new formed ZAT Partnership. All other partners contributed cash and ZAT partnership has no liabilities. How much income must Zoey recognize as a result of the transaction? Question 4 options: a) $0. b) $20,000. c) $45,000. d) $55,000. e) $100,000.