Sue invested $14,000 in the ABC Limited Partnership and received a 10 percent interest in the partnership. The partnership had $38,000 of qualified nonrecoursedebt and $38,000 of debt Sue is not responsible to repay because she is a limited partner. Sue is allocated a 10 percent share of both types of debt, resulting in atax basis of $21,600 and an at-risk amount of $17,800. During the year, ABC LP generated a ($216,000) loss. How much of Sue's loss is disallowed due to her taxbasis or at-risk amount?Multiple ChoiceO$0; all of her loss is allowed to be deducted.$3,800 disallowed because of her at-risk amount.$3,800 disallowed because of her tax basis.$7,600 disallowed because of her tax basis.$7,600 disallowed because of her at-risk amount. 20eBookSue invested $14,000 in the ABC Limited Partnership and received a 10 pedebt and $38,000 of debt Sue is not responsible to repay because she is atax basis of $21,600 and an at-risk amount of $17,800. During the year, ABCbasis or at-risk amount?Multiple ChoiceOOOO$0; all of her loss is allowed to be deducted.$3,800 disallowed because of her at-risk amount.$3,800 disallowed because of her tax basis.$7,600 disallowed because of her tax basis.$7,600 disallowed because of her at-risk amount.

Tax liability refers to the amount of tax that a taxpayer owes to the government based on their…

Sue invested $14,000 in the ABC Limited Partnership and received a 1 debt and $38,000 of debt Sue is not responsible to repay because sh ax basis of $21.600 and an at-risk amount of $17800 During the year

Sue invested $14,000 in the ABC Limited Partnership and received a 1 debt and $38,000 of debt Sue is not responsible to repay because sh ax basis of $21.600 and an at-risk amount of $17800 During the year

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter10: Partnership Taxation

Section: Chapter Questions

Problem 14MCQ

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Sue invested $6,500 in the ABC Limited Partnership and received a 10 percent interest in the partnership. The partnership had $23,000 of qualified nonrecourse debt and $23,000 of debt Sue is not responsible to repay because she is a limited partner. Sue is allocated a 10 percent share of both types of debt, resulting in a tax basis of $11,100 and an at-risk amount of $8,800. During the year, ABC LP generated a ($111,000) loss. How much of Sue's loss is disallowed due to her tax basis or at-risk amount? Multiple Choice $0: all of her loss is allowed to be deducted. $2.300 disallowed because of her at-risk amount. $2,300 disallowed because of her tax basis. $4,600 disallowed because of her tax basis.
Denger
PP contributed 24,000 and CC contributed 48,000 to form a partnership and they agreed to shareprofits in the ratio of their original capital contributions. During the first year of operations, theymade a profit of 16,290. PP withdrew 5,050 and CC 8,000. At the start of the following year, theyagreed to admit GG into the partnership. He was to receive a1/4 interest in the capital and profitsupon payment of 30,000 to PP and CC whose capital accounts were reduced by transfers to GG’scapital account of amounts sufficient to bring them back to their original capital ratio. How shouldthe 30,000 paid by Gg be divided between PP and CC? a. PP 9,825; CC 20,175 b. PP 15,000; CC 15,000c. PP 10,000; CC 20,000d. PP 9,300; 20,700
Maria is a 55% limited partner in the newly formed XYZ Partnership. The partnership’s business is the acquisition of prime real estate properties and renting these properties to top corporate tenants. Maria invested $300,000 for his partnership interest. The partnership borrows $100,000 of nonrecourse debt for the acquisition of the real estate. The debt was borrowed from the general partner’s brother in law who sold the real estate he owned to the partnership. Maria's share of the partnership loss this first year is ($450,000.) Assuming Maria's has passive income from other sources of $1,000,000 this year, how much of his $450,000 loss may she deduct this year. Please show your work.
Pipoy contributed P 24,000 and Kikay contributed 48,000 to form a partnership, and they agreed to share profits in the ratio of original contributions. During the 1st year of operations, they made a profit of 16,290; Pipoy withdraw 5,050 and Kikay withdraw 8,000. At the start of the following year, they agreed to admit Gigi into the partnership. She was to receive a ¼ interest in the capital & profits upon payment of 30,000 to Pipoy & Kikay. * What is the Capital balance of Pipoy & Kikay before admission of Gigi? 24,380 ; 50,860 respectively 29,430 ; 58,860 respectively 24,000 ; 48,000 respectively 18,950 ; 40,000brespectively * What is the book value of interest acquired by Gigi? a. 18,000 b. 26,310 c. 18,810 d. not given * What is the new profit-loss sharing ratio for Kikay? a. 53.33% b. 25% c. 26.67% d. 50%
Abner and Bimbo have just formed a partnership. Abner contributed cash of $2,346,000 and office equipment that cost $1,170,000. The equipment had been used in the sole proprietorship and had been 80% depreciated. The current fair value of the equipment is $756,000. An unpaid mortgage loan on the equipment of $252,000 will be assumed by the partnership. Abner is to have a 60% interest in the partnership net assets. Bimbo is to contribute, only, merchandise with a fair value of $1,890,000. Both partners agreed on a profit and loss ratio of 55% to Abner and the balance to Bimbo. Required: Choose the correct answer with solution. 1. To finalize the partnership agreement, Abner should make additional investment (withdrawal) of cash in the amount of. a. $ (36,000) b. $ (540,000) c. $ 264,000 d. $ (15,000)
The capital accounts of Trent Henry and Tim Chou have balances of $160,000 and $100,000, respectively. LeAnne Gilbert and Becky Clarke are to be admitted to the partnership. Gilbert buys one-fifth of Henry’s interest for $35,000 and one-fourth of Chou’s interest for $29,000. Clarke contributes $90,000 cash to the partnership, for which she is to receivean ownership equity of $90,000.a. Journalize the entries to record the admission of (1) Gilbert and (2) Clarke.b. What are the capital balances of each partner after the admission of the new partners?
At year-end, the Circle City partnership has the following capital balances: Manning, Capital $150,000 Gonzalez, Capital 130,000 Clark, Capital 100,000 90,000 Freeney, Capital Profits and losses are split on a 3:3:2:2 basis, respectively. Clark decides to leave the partnership and is paid $114,000 from the business based on the original contractual agreement. The payment made to Clark beyond his capital account was for Clark's share of previously unrecognized goodwill. After recognizing partnership goodwill, what is Manning's capital balance after Clark withdraws?
Gomez has a capital balance of $240,000 after adjusting assets to fair market value. Banks contributes $380,000 to receive a 60% interest in a new partnership with Gomez. Determine the amount and recipient of the partner bonus.
The capital accounts of Trent Henry and Tim Chou have balances of $147,400 and $92,600, respectively. LeAnne Gilbert and Becky Clarke are to be admitted to the partnership. Gilbert buys one-fifth of Henry’s interest for $27,400 and one-fourth of Chou’s interest for $19,000. Clarke contributes $75,000 cash to the partnership, for which she is to receive an ownership equity of $75,000. a. On December 31, journalize the entries to record the admission of (1) Gilbert and (2) Clarke. Refer to the chart of accounts for the exact wording of the account titles
Octavio starts the year with outside basis of $23,000 and an amount at-risk of $23,000 in his 40-percent general partnership interest in Brown Partnership. In the current year, the partnership distributes $5,000 to Octavio. His share of allocated ordinary income is $3,000. The partnership also takes on nonrecourse debt of $20,000 (none of which is qualified nonrecourse financing). Compute Octavio’s ending outside basis and amount at-risk. Outside Basis: Amount at-risk:
AGF partnership begins its first year of operation with the following capital balances and profit and loss percentages: Able Capital $ 60,000 (20%) Green Capital $80,000 (30%) Frank Capital $ 100,000 (50%) Each partner is allocated interest of 5% on beginning capital balances. Green is allocated salary of $20,000 for the full year. Frank is allocated salary of $10,000 for the full year. Able is not allocated salary. Each partner has drawings of $30,000 in the first year. Assume that partnership net income in the first year is $300,000. What is the balance in Frank's capital account at the end of the year a. $235,000 b. $214,000 c. $151,400 d. $274,000 e. $244,000