Problem: Module 7 Textbook Problem 3 Learning Objectives: • 7-5 Differentiate between a distributive share of partnership income and cash flow • 7-6 Adjust the tax basis in a partnership interest Garlic, an individual, is a limited partner in Onion Partnership. This year, Garlic's share of partnership ordinary income is $20,000, and she received a cash distribution of $30,000. Garlic's tax basis in her partnership interest at the beginning of the year was $50,000. Her marginal tax rate is 22 percent. Garlic qualifies for the QBI deduction, without regard to any limitations on this QBI deduction. Required: a. Calculate the tax cost of Garlic's partnership earnings this year. Tax cost b. Compute Garlic's after-tax cash flow from her partnership activity this year. After-tax cash flow c. Compute Garlic'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

Problem: Module 7 Textbook Problem 3 Learning Objectives: • 7-5 Differentiate between a distributive share of partnership income and cash flow • 7-6 Adjust the tax basis in a partnership interest Garlic, an individual, is a limited partner in Onion Partnership. This year, Garlic's share of partnership ordinary income is $20,000, and she received a cash distribution of $30,000. Garlic's tax basis in her partnership interest at the beginning of the year was $50,000. Her marginal tax rate is 22 percent. Garlic qualifies for the QBI deduction, without regard to any limitations on this QBI deduction. Required: a. Calculate the tax cost of Garlic's partnership earnings this year. Tax cost b. Compute Garlic's after-tax cash flow from her partnership activity this year. After-tax cash flow c. Compute Garlic'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

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Exercise 3: Partnership Formation On July 1,2019, Gerardo and Ismael decide to form a partnership with Gerardo transferring his net assets excluding cash and Ismael contributing cash in an amount equal to one-half of Gerardo’s investment. The balance sheet of Gerardo is as follows: (see attached image) The agreement calls for adjustments to the net assets of Gerardo as follows: The receivables are to be valued at P18,000 The furniture was acquired five years ago and is estimated to have a remaining useful life of three years. The goodwill of Gerardo’s Grocery Store is valued at P15,000 Instructions: Give the required entries on the new set of books of the partnership Prepare a balance sheet for the firm Gerardo and Ismael as of July 1, 2019.
OverviewDiscuss tax planning opportunities utilizing a partnership structure. InstructionsRead Section 10.6 “Tax Planning” in Chapter 10. If you were going to start a business with a few of your closest friends (or family), would you choose to form a partnership? Why or why not?
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Exercise 3-7 (Calculation of Bonus) Powell is the managing partner of Power Partnership. He is given an incentive of 5% bonus on profit. The profit of the partnership id P400,000 and income tax rate is 30%. Instruction: Determine the amount of bonus under each of the following assumptions: 1. Bonus is computed based on profit before deduction for bonus and income tax. 2. Bonus is computed based on profit after deduction for bonus but before deduction for income tax. 3. Bonus is computed based on profit before deduction for bonus but after deduction for income tax. 4. Bonus is computed based on profit after deduction for both bonus and income tax. Note: You may modify your answer sheet to fit your solution. Follow the Instructions strictly. Answer what Is asked only.
H-1
Ahmad an active partner receives an annual Bonus 25% of partnership net income after deducting his bonus for the year ended 2019 partnership net income before the bonus amounted to 300,000 what Ahmad bonus should be Select one: a. 60,000 b. 56,250 c. 62,500 o d. 75,000