This year, the Tastee Partnership reported income before guaranteed payments of $263,000. Stella owns a 85% profits interest and works 1,770 hours per year in the business. Euclid owns a 15% profits interest (with a basis of $30,000 at the beginning of the tax year) and performs no services for the partnership during the year. For services performed during the year, Stella receives a "salary" of $13,150 per month. Euclid withdrew $26,300 from the partnership during the year as a normal distribution of cash from Tastee (i.e., not for services). If required, round your answers to the nearest dollar. Question Content

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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This year, the Tastee Partnership reported income before guaranteed payments of $263,000. Stella owns a 85% profits interest and works 1,770 hours per year in the business. Euclid owns a 15% profits interest (with a basis of $30,000 at the beginning of the tax year) and performs no services for the partnership during the year. For services performed during the year, Stella receives a "salary" of $13,150 per month. Euclid withdrew $26,300 from the partnership during the year as a normal distribution of cash from Tastee (i.e., not for services).

If required, round your answers to the nearest dollar.

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a.  What is the amount of guaranteed payments made by the partnership this year?
$fill in the blank 

 

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b.  How much is the partnership's ordinary income after any permitted deduction for guaranteed payments?
$fill in the blank 

 

Question Content Area

c.  How much income will Stella report?
$fill in the blank 

 

Question Content Area

d.  How much income will Euclid report?

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