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Andrew and Piter are paterners, carrying on a business as a partnership. The partnership agreement provides that Andrew is to be paid an annual salary of $40,000. The balance is to be distributed equally between Andrew and Piter. The partnership agreement also provides that thepartners are to share the losses equally in the case of losses. The partnership’s assessable income for the income year is $100,000. Deductible expenses are $120,000.
Required:
What are the tax consequences for the partnership and each partner?
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- Jhumpa, Stewart, and Kelly are all one-third partners in the capital and profits of Firewalker General Partnership. In addition to their normal share of the partnership's annual income, Jhumpa and Stewart receive an annual guaranteed payment of $10,000 each to compensate them for additional services they provide. Firewalker's income statement for the current year reflects the following revenues and expenses: $ 340,000 3,300 1,200 (120,000) ( 75,000) (28,000) (20,000) (4,500) $ 97,000 Sales r evenue Interest income Long-term capital gains Cost of goods sold Employee wages Depreciation expense Guaranteed payments Miscellaneous expenses Overall net income (Leave no answer blank. Enter zero if applicable.) c. How much self-employment tax will each partner pay assuming none has any other source of income or loss? (Round your intermediate calculations and final answers to the nearest whole dollar amount.) Jhumpa Stewart Kelly Self-employment taxThe partnership agreement of Alix, Gise, and Bosco provides for the following income ratio: (a) Alix, the managing partner, receives a salary allowance of $108,000, (b) each partner receives 15% interest on average capital investment, and (c) remaining net income or loss is divided equally. The average capital investments for the year were: Alix $600,000, Gise $1,200,000, and Bosco $1,800,000. If partnership net income is $540,000, the amount allocated to Alix should be a. $90,000. Ch10,11,12 Principles of Accounting I b. $162,000. c. $180,000. d. $198,000.Goodman, Pinkman, and White formed a partnership on January 1, 2020, and made capital contributions of $125,000 (Goodman), $175,000 (Pinkman), and $250,000 (White), respectively. With respect to the division of income, they agreed to the following: (1) interest of an amount equal to 10% of the that partner’s beginning capital balance for the year; (2) annual compensation of $15,000 to Pinkman; and (3) the remainder of the income or loss to be split among the partners in the following percentages: (a) 20% for Goodman; (b) 40% for Pinkman; and (c) 40% for White. Net income was $200,000 in 2020 and $240,000 in 2021. Each partner withdrew $1,500 for personal use every month during 2020 and 2021. What was Goodman’s total share of net income for 2020?
- Jenna began the year with a tax basis of $21,000 in her partnership interest. Her share of partnership liabilities consists of $9,000 of recourse liabilities and $11,000 of nonrecourse liabilities at the beginning of the year and $9,000 of recourse liabilities and $13,000 of nonrecourse liabilities at the end of the year. During the year, she was allocated $31,000 of partnership ordinary business loss. Jenna does not materially participate in this partnership, and she has $8,000 of passive income from other sources. How much of Jenna’s loss is limited by her tax basis? How much of Jenna’s loss is limited by her at-risk amount? How much of Jenna’s loss is limited by the passive activity loss rules? Please subparts answer fast i give positive rating and without plagiarism no plagiarism pleaseA partnership begins its first year with the following capital balances: The articles of partnership stipulate that profits and losses be assigned in the following manner: Bernard is allocated compensation of $18,000 per year. Each partner is allowed to withdraw up to $5,000 cash per year. Any remaining profits and losses are allocated on a 3:3:4 basis, respectively. Each partner is allowed to withdraw up to $5,000 cash per year. Assuming that the net income is $60,000 and that each partner withdraws the maximum amount allowed, what is the balance in Collins capital account at the end of that year? $70,800 $86,700 $73,500 $81,700Bryan and Cody each contributed $120,000 to the newly formed BC Partnership in exchange for a 50% interest. The partnership used the available funds to acquire equipment costing $200,000 and to fund current operating expenses. The partnership agreement provides that depreciation will be allocated 80% to Bryan and 20% to Cody. All other items of income and loss will be allocated equally between the partners.Upon liquidation of the partnership, property will be distributed to the partners in accordance with their § 704(b) book capital account balances. Any partner with a negative capital account must contribute cash in the amount of the negative balance to restore the capital account to $0. In its first year, the partnership reported an ordinary loss (before depreciation) of $80,000 and depreciation expense of $36,000. In its second year, the partnership reported $40,000 of income from operations (before depreciation), and it reported depreciation expense of $57,600. a. Calculate the…
- Farmer and Taylor formed a partnership with capital contributions of $245,000 and $295,000, respectively. Their partnership agreement calls for Farmer to receive a $79,000 per year salary allowance. The remaining income or loss is to be divided equally. Assuming net income for the current year is $189,000, the journal entry to allocate net income is: dit Fo Debit Income Summary, $189,000; Credit Farmer, Capital, $94,500; Credit Taylor, Capital, $94,500. Debit Income Summary, $189,000; Credit Farmer, Capital, $166,000; Credit Taylor, Capital, $23,000. Debit Income Summary, $189,000; Credit Farmer, Capital, $48,840; Credit Taylor, Capital, $140,160. Debit Income Summary, $189,000; Credit Farmer, Capital, $134,000; Credit Taylor, Capital, $55,000. Debit Income Summary, $189,000; Credit Taylor, Capital, $134,000; Credit Farmer, Capital, $55,000.The partnership agreement of the G&P general partnership states that Gary will receive a guaranteed payment of $14,500, and that Gary and Prudence will share the remaining profits or losses in a 45/55 ratio. For year 1, the G&P partnership reports the following results: Sales revenue Gain on sale of land ($1231) Cost of goods sold Depreciation-MACRS Employee wages Cash charitable contributions Municipal bond interest Other expenses (Negative amounts should be indicated by a minus sign.) Problem 20-61 Part a (Algo) a-1. How much ordinary income (loss) is allocated to Gary for the year? a-2. Compute Gary's share of separately stated items to be reported on his year 1 Schedule K-1, including his self-employment income (loss). Req A1 Complete this question by entering your answers in the tabs below. Req A2 $ 80,700 6,900 (28,200) (18,100) (17,200) (4,600) Description Separately Stated Items on Schedule K-1: §1231 gains Cash charitable contributions Compute Gary's share of separately stated…Lewis Wardell and Lewis Lomas own Lewis’ Antiques. Their partnership agreement provides for annual salary allowances of $200,000 for Wardell and $180,000 for Lomas, and interest of 10 percent on each partner’s invested capital at the beginning of the year. The remainder of the net income or loss is to be distributed 50 percent to Wardell and 50 percent to Lomas. The partners withdraw their salary allowances monthly. On January 1, 20X1, the capital account balances were Wardell, $600,000, and Lomas, $560,000. On December 15, 20X1, Lomas made a permanent withdrawal of $55,000. The net income for 20X1 was $640,000. Required: Prepare the general journal entry on December 15, 20X1, to record the permanent withdrawal by Lomas. Prepare the general journal entries on December 31, 20X1, to: Record the salary allowances for the year. Record the interest allowances for the year. Record the division of the balance of net income. Close the drawing accounts into the…
- Artemis is a 30% partner in the CAR Partnership. At the beginning of the tax year, Artemis' basis in the partnership interest was $60,000, including a share of partnership liabilities. During the current year, CAR reported net ordinary income of $40,000. In addition, CAR distributed $5,000 to each of the partners ($15,000 total). At the end of the year, Artemis' share of partnership liabilities increased by $20,000. Artemis' basis in the partnership interest at the end of the year is: a. $87,000. b. $75,000. c. $82,000. d. $120,000. e. $60,000.Jerry and Sherry own and operate a partnership. Jerry’s capital balance is $50,000 and Sherry’s is $55,000. Jerry and Sherry decided to admit a new partner, Allison, to their partnership. By the terms of their partnership agreement, Jerry and Sherry share income/loss equally. Allison intends to contribute $40,000 cash to receive a twenty-five percent interest in the partnership Required: a. Revalue the partnership assets b. Determine the total equity of the partnership after the new partner is admitted c. Determine the new partner share of the total equity d. Determine the bonus resulting from Allison’s equity of her contribution e. Make journal entries to record Allison’s admission to the partnership. Please solve sub-part e. Show Your Work:Greene and Whatley formed a partnership at the beginning of the year, agreeing to share capital and profits equally. Greene contributed $50,000 cash. Whatley contributed land with an adjusted basis to him of $20,000 and a fair market value of $54,000 at the time of contribution. The land is subject to a $8,000 mortgage, which is assumed by the partnership. Whatley's tax basis in the partnership after the contribution is A. $12,000 B. $16,000 C. $50,000 D. None of these E. $20,000
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