Problem: Module 7 Textbook Problem 5 Learning Objectives: . 7-6 Adjust the tax basis in a partnership interest. . 7-7 Apply the basis limitation on the deduction of partnership losses This year, individual Kale and individual Spinach formed Leafy Green Partnership. Kale contributed $50,500 cash, and Spinach contributed business assets with a $50,500 FMV. Spinach's adjusted basis in these assets was only $10,100. The partnership agreement provides that income and loss will be divided equally between the two partners. Partnership operations for the year generated a $48,400 loss. Required: How much loss may each partner deduct currently, and what basis will each partner have in her interest at the beginning of next year? Determine the loss each partner can deduct currently considering the basis foss limitation, but no other loss limitations. (Losses and deductions should be entered as negative numbers.) Initial basis in partnership interest Deduction for share of partnership loss Adjusted basis at beginning of next year Partner Partner Kale Spinach S 0 $ 0

Problem: Module 7 Textbook Problem 5 Learning Objectives: . 7-6 Adjust the tax basis in a partnership interest. . 7-7 Apply the basis limitation on the deduction of partnership losses This year, individual Kale and individual Spinach formed Leafy Green Partnership. Kale contributed $50,500 cash, and Spinach contributed business assets with a $50,500 FMV. Spinach's adjusted basis in these assets was only $10,100. The partnership agreement provides that income and loss will be divided equally between the two partners. Partnership operations for the year generated a $48,400 loss. Required: How much loss may each partner deduct currently, and what basis will each partner have in her interest at the beginning of next year? Determine the loss each partner can deduct currently considering the basis foss limitation, but no other loss limitations. (Losses and deductions should be entered as negative numbers.) Initial basis in partnership interest Deduction for share of partnership loss Adjusted basis at beginning of next year Partner Partner Kale Spinach S 0 $ 0

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 12-7 (Algo) Journalizing partnership transactions LO P2 On March 1, Eckert and Kelley formed a partnership. Eckert contributed $95,000 cash, and Kelley contributed land valued at $76,000 and a building valued at $106,000. The partnership also took Kelley's $85,000 long-term note payable associated with the land and building. The partners agreed to share Income as follows: Eckert gets an annual salary allowance of $28,000, both get an annual Interest allowance of 9% of their initial capital Investment, and any remaining Income or loss is shared equally. On October 20, Eckert withdrew $30,000 cash and Kelley withdrew $23,000 cash. First year Income was $82,000. Required: 18. & 1b. Prepare Journal entries to record the partners' Initial capital Investments and their subsequent cash withdrawals 1c. Determine the partners' shares of Income, and then prepare Journal entries to close Income Summary and the partners' withdrawals accounts. 2. Determine the balances of the partners'…
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Problem 14-54 (LO 14-2, 14-3) Wade has a beginning basis in a partnership of $23,000. His share of income and expense from the partnership consists of the following amounts: Ordinary income Guaranteed payment Long-term capital gain 5 1231 gain Charitable contributions $ 179 expense Cash distribution Required: a. What is Wade's self-employment income? $ 43,000 12,000 15,500 4,300 2,000 b. Calculate Wade's basis at the end of the year. 18,000 6,000 a. Self-employment income b. Ending basis Amount
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Problem: Module 7 Textbook Problem 9 Learning Objectives: • 7-6 Adjust the tax basis in a partnership interest • 7-7 Apply the basis limitation on the deduction of partnership losses • 7-9 Identify similarities and differences in the tax treatment of S corporations versus partnerships At the beginning of Year 1 Ms. Mushroom, an individual, purchased a 20 percent interest in Fungi Partnership for $22,000. Ms. Mushroom's Schedule K-1 reported that her share of Fungi's debt at year-end was $29,000, and her share of ordinary loss was $46,600. On January 1, Year 2, Ms. Mushroom sold her interest to another partner for $3,700 cash. Required: a. How much of her share of Fungi's loss can Ms. Mushroom deduct on her Year 1 tax return? b. Compute Ms. Mushroom's recognized gain on sale of her Fungi Partnership interest. c. How would your answers to parts a and b change if Fungi were an S corporation instead of a partnership? Complete this question by entering your answers in the tabs below.…
A-7
Dividing Partnership Net Loss Lynn Carpenter and Matthew Fredrick formed a partnership in which the partnership agreement provided for salary allowances of $51,000 and $45,000, respectively. Determine the division of a $26,000 net loss for the current year, assuming that remaining income or losses are shared equally by the two partners. Use the minus sign to indicate any deductions or deficiencies. Lynn Carpenter Matthew Fredrick Total Salary Allowance $fill in the blank 1 $fill in the blank 2 $fill in the blank 3 Remainder $fill in the blank 4 $fill in the blank 5 $fill in the blank 6 Net Loss $fill in the blank 7 $fill in the blank 8 $fill in the blank 9
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SCO PROFESSOR: NAME: SECTION: Problem #20 Withdrawal of a Partner position for the partnership on that date follows: Cebedo, Basa and Ibrahim Statement of Financial Position July 10, 2019 Liabilities and Partners' Capital 骨 Assets P 74,000 36,000 135,000 30,000 P275,000 Liabilities P 45,000 120,000 Cash Trade Accounts Receivable (net) Plant Assets (net) Goodwill (net) Cebedo, Capital Basa, Capital Ibrahim, Capital 60,000 50,000 P275,000 Total Total Required: Prepare the journal entries to record Ibrahim's withdrawal under each of the following assumptions: 1. Ibrahim is paid P54,000, and the excess amount paid over Ibrahim's capital account balance is recorded as a bonus to Ibrahim from Cebedo and Basa. 2. Ibrahim is paid P45,000, and the difference is recorded as a bonus to Cebedo and Basa from Ibrahim. * 1oranim accepted cash of P40,500 and plant assets (equipment) with a current fair value of P9,000. The equipment had cost P30.000 and was 60% depreciated, with sidual value (Record…
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