Wylie is a general partner in a service-providing partnership and receives cash of $290,300 in liquidation of his partnership interest, in which he has a basis of $217,725. The partnership owns no hot assets and continues in existence. After following all of the classification requirements of § 736, $195,953 of this amount is classified as a property payment [§ 736(b)] and $94,347 is classified as a guaranteed payment [§ 736(a)] (assume that this payment is for unstated partnership goodwill). As a result of the liquidation proceeds, how much will Wylie recognize as a capital gain or loss, and how much will be ordinary income? How much can the partnership likely deduct? Wylie recognizes a $ likely deduct $ ✔and he recognizes capital loss which is a guaranteed payment as ordinary income. The partnership can

Wylie is a general partner in a service-providing partnership and receives cash of $290,300 in liquidation of his partnership interest, in which he has a basis of $217,725. The partnership owns no hot assets and continues in existence. After following all of the classification requirements of § 736, $195,953 of this amount is classified as a property payment [§ 736(b)] and $94,347 is classified as a guaranteed payment [§ 736(a)] (assume that this payment is for unstated partnership goodwill). As a result of the liquidation proceeds, how much will Wylie recognize as a capital gain or loss, and how much will be ordinary income? How much can the partnership likely deduct? Wylie recognizes a $ likely deduct $ ✔and he recognizes capital loss which is a guaranteed payment as ordinary income. The partnership can

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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As part of the initial investment, Jackson contributes accounts receivable that had a balance of $40,480 in the accounts of a sole proprietorship. Of this amount, $1,308 is deemed completely worthless. For the remaining accounts, the partnership will establish a provision for possible future uncollectible accounts of $655. The amount debited to Accounts Receivable for the new partnership is
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1. A partnership has four equal partners who share profits and losses in accordance with their respective interests. It has $400,000 in taxable income but doesn't distribute any cash to the partners. a. What amount of income will the partnership report on its tax return? None. There is no business income tax on a partnership. b. What amount of the partnership's taxable income will be subject to tax at the partnership level? c. Will each partner recognize taxable income from their interest in the partnership? If so, how much? d. If ABC was a corporation with four equal owners, how would this change your answers in parts (a)- (c)?
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a. What are the amount and character of Megan's recognized gain or loss? b. What is Megan's basis in the distributed assets? c. What are the amount and character of Matthew's recognized gain or loss? d. What is Matthew's basis in the distributed assets?
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