Problem: Module 7 Textbook Problem 8 Learning Objective: 7-6 Adjust the tax basis in a partnership interest On January 1, Year 1, Radish, an individual, paid $15,000 for 5 percent of the stock in Root Corp., an S corporation. In November Year 1, he loaned $8,000 to Root Corp. in return for a promissory note. Root Corp. generated a $600,000 operating loss in Year 1. Root Corp. generated $220,000 ordinary business income in Year 2. In Year 3, Root Corp. repaid its $8,000 debt to Radish before he restored any basis in the debt. Required: How much gain or loss, if any, will Radish recognize as a result of the debt repayment in Year 3? Gain Answer is complete but not entirely correct. $ 8,000

Problem: Module 7 Textbook Problem 8 Learning Objective: 7-6 Adjust the tax basis in a partnership interest On January 1, Year 1, Radish, an individual, paid $15,000 for 5 percent of the stock in Root Corp., an S corporation. In November Year 1, he loaned $8,000 to Root Corp. in return for a promissory note. Root Corp. generated a $600,000 operating loss in Year 1. Root Corp. generated $220,000 ordinary business income in Year 2. In Year 3, Root Corp. repaid its $8,000 debt to Radish before he restored any basis in the debt. Required: How much gain or loss, if any, will Radish recognize as a result of the debt repayment in Year 3? Gain Answer is complete but not entirely correct. $ 8,000

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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K @ W S F2 Antonio is single, earned wages of $44,700, received $1500 in interest from a savings account, contributed $3300 to a tax-deferred retirement plan, and took the standard deduction. Fin- gross income, adjusted gross income, and taxable income. Tax Rate 10% 12% 22% 24% 32% 35% 37% Standard Deduction #3 E Single up to $9950 up to $40,525 up to $86,375 up to $164,925 up to $209,425 up to $523,600 above $523,600 $12,550 Antonio's gross income was $ (Simplify your answer.) Antonio's adjusted gross income was $. (Simplify your answer.) Antonio's taxable income was $ (Simplify your answer.) D 80 F3 $ 4 Married Filing Jointly up to $19,900 up to $81,050 up to $172,750 up to $329,850 up to $418,850 up to $628,300 above $628,300 $25,100 F4 R F 07 dº % 5 F5 Married Filing Separately up to $9950 up to $40,525 up to $86,375 up to $164,925 up to $209,425 up to $314,150 above $314,150 $12,550 T G 6 F6 Y Head of Household up to $14,200 up to $54,200 up to $86,350 up to $164,900 up to…
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Required information Problem 12-3A (Algo) Allocating partnership income LO P2 [The following information applies to the questions displayed below] Ries, Bax, and Thomas invested $56,000, $72,000, and $80,000, respectively, in a partnership. During its first calendar year, the firm earned $430,200. Required: Prepare the entry to close the firm's Income Summary account as of its December 31 year-end and to allocate the $430,200 net income under each of the following separate assumptions. Problem 12-3A (Algo) Part 3 3. The partners agreed to share income and loss by providing annual salary allowances of $40,000 to Ries, $35,000 to Bax, and $47,000 to Thomas, granting 10% interest on the partners' beginning capital investments; and sharing the remainder equally. Complete this question by entering your answers in the tabs below. Appropriation of profits General Journal Allocate $430,200 net indome by providing annual salary allowances of $40,000 to Ries, $35,000 to Bax, and $47,000 to…
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 loss 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…
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.…
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Required information Problem 12-3A (Algo) Allocating partnership income LO P2 Skip to question [The following information applies to the questions displayed below.] Ries, Bax, and Thomas invested $58,000, $74,000, and $82,000, respectively, in a partnership. During its first calendar year, the firm earned $361,500. Required: Prepare the entry to close the firm’s Income Summary account as of its December 31 year-end and to allocate the $361,500 net income under each of the following separate assumptions.
Required information Problem 12-3A (Algo) Allocating partnership income LO P2 [The following information applies to the questions displayed below.] Ries, Bax, and Thomas invested $58,000, $74,000, and $82,000, respectively, in a partnership. During its first calendar year, the firm earned $361,500. Required: Prepare the entry to close the firm's Income Summary account as of its December 31 year-end and to allocate the $361,500 net income under each of the following separate assumptions. Problem 12-3A (Algo) Part 1 1. The partners did not agree on a plan, and therefore share income equally. View transaction list Journal entry worksheet 1 Record the entry to close the income summary account assuming the partners did not agree on a plan, and therefore share income equally. Note: Enter debits before credits. Date December 31 Record entry General Journal Clear entry Debit Credit View general journal