Ms. Kona owns a 10 percent interest

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Ms. Kona owns a 10 percent interest in Carlton LLC. This year, the LLC generated $66,400 ordinary income. Ms. Kona’s marginal tax rate is 32 percent, and she does not pay SE tax on her LLC income.
 

Required:

  1. Compute the tax cost on Ms. Kona’s share of Carlton’s income assuming that she received a $29,000 cash distribution this year.
  2. Compute the tax cost on Ms. Kona’s share of Carlton’s income assuming that she received no cash distribution this year.
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