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Kari is a partner in Lizard Partnership. This year, Kari's share of partnership ordinary income is $20,000, and she received a cash distribution of $30,000. Kari's tax basis in her partnership interest at the beginning of the year was $50,000. Her marginal tax rate is 22 percent. Kari qualifies for the Section 199A deduction, without regard to the wage limitation. a. Calculate the tax cost of Kari's partnership earnings this year. Tax cost b. Compute Kari's after-tax cash flow from her partnership activity this year. After-tax cash flow c. Compute Kari's tax basis in her partnership interest at the ending of the year. Assume no change in her share of partnership liabilities during the year. Tax basis at the end of the year

Kari is a partner in Lizard Partnership. This year, Kari's share of partnership ordinary income is $20,000, and she received a cash distribution of $30,000. Kari's tax basis in her partnership interest at the beginning of the year was $50,000. Her marginal tax rate is 22 percent. Kari qualifies for the Section 199A deduction, without regard to the wage limitation. a. Calculate the tax cost of Kari's partnership earnings this year. Tax cost b. Compute Kari's after-tax cash flow from her partnership activity this year. After-tax cash flow c. Compute Kari's tax basis in her partnership interest at the ending of the year. Assume no change in her share of partnership liabilities during the year. Tax basis at the end of the year

FINANCIAL ACCOUNTING
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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Kari is a partner in Lizard Partnership. This year, Kari's share of partnership ordinary income is $20,000, and she received a cash distribution of $30,000. Kari's tax basis in her partnership interest at the beginning of the year was $50,000. Her marginal tax rate is 22 percent. Kari qualifies for the Section 199A deduction, without regard to the wage limitation. a. Calculate the tax cost of Kari's partnership earnings this year. Tax cost b. Compute Kari's after-tax cash flow from her partnership activity this year. After-tax cash flow c. Compute Kari's tax basis in her partnership interest at the ending of the year. Assume no change in her share of partnership liabilities during the year. Tax basis at the end of the year
Transcribed Image Text:Kari is a partner in Lizard Partnership. This year, Kari's share of partnership ordinary income is $20,000, and she received a cash distribution of $30,000. Kari's tax basis in her partnership interest at the beginning of the year was $50,000. Her marginal tax rate is 22 percent. Kari qualifies for the Section 199A deduction, without regard to the wage limitation. a. Calculate the tax cost of Kari's partnership earnings this year. Tax cost b. Compute Kari's after-tax cash flow from her partnership activity this year. After-tax cash flow c. Compute Kari's tax basis in her partnership interest at the ending of the year. Assume no change in her share of partnership liabilities during the year. Tax basis at the end of the year
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