Income Tax Fundamentals 2020
38th Edition
ISBN: 9780357391129
Author: WHITTENBURG
Publisher: Cengage
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Question
Chapter 10, Problem 7P
To determine
Introduction:
The W’s recognized income or loss and basis of interest at the year-end.
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Wilson has a 40 percent interest in the assets and income of the CC&W Partnership, and the basis in his partnership interest is $45,000 at the beginning of 2019. During 2019, the partnership's net loss is $60,000 and Wilson's share of the loss is $24,000. Also, Wilson receives a cash distribution from the partnership of $12,000 on June 30, 2019.
a. Indicate the amount of income or loss from the partnership that should be reported by Wilson on his 2019 individual income tax return.$
b. Calculate Wilson's basis in his partnership interest at the end of 2019.$
Which of the following cannot be characterized as a guaranteed payment to a partner?
A specified minimum 4% return on investment for a $1 million contribution by a partner
A specified 5% profit allocation on computed partnership profits
A minimum required annual distribution of $100,000 to a partner for regular services to the partnership
none of the above
How much is Tony’s share in the net income of the part?
Tony and Steve formed a partnership on January 1, 2019. Their partnership earned a net income of 1,800,000 for the year ended 2019. The following stipulation are found in their articles of partnership:
Tony is the receive a monthly salary of P25,000 as compensation for his managing duties in the partnership
Steve is the receive an annual salary of P180,000 from the partnership
Bonus of 15% is granted to Tony if the partnership income exceeds P1,000,000 (Bonus is computed based on the excess from P1,000,000)
Each partner is to receive an interest of 10% based on their weighted average capital balances
The remaining balance is divided accordingly to Tony and Steve in the ratio of 2:3
The following are the capital transaction of the partners:
Tony
Steve
Debit
Credit
Debit
Credit
1-Jan
600,000
700,000
1-Mar
120,000
1-Apr
300,000
1-Jul
200,000…
Chapter 10 Solutions
Income Tax Fundamentals 2020
Ch. 10 - Which of the following may not be treated as a...Ch. 10 - Prob. 2MCQCh. 10 - Prob. 3MCQCh. 10 - Prob. 4MCQCh. 10 - Prob. 5MCQCh. 10 - Prob. 6MCQCh. 10 - Abigail contributes land with an adjusted basis of...Ch. 10 - Prob. 8MCQCh. 10 - Prob. 9MCQCh. 10 - Prob. 10MCQ
Ch. 10 - Prob. 11MCQCh. 10 - Prob. 12MCQCh. 10 - Prob. 13MCQCh. 10 - Prob. 14MCQCh. 10 - Prob. 15MCQCh. 10 - Prob. 16MCQCh. 10 - Kendra is an attorney and owns 60 percent of a law...Ch. 10 - Prob. 18MCQCh. 10 - In 2019, Gloria, a single taxpayer, receives a...Ch. 10 - Prob. 20MCQCh. 10 - Prob. 21MCQCh. 10 - Prob. 22MCQCh. 10 - Prob. 23MCQCh. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 9PCh. 10 - Prob. 10PCh. 10 - Prob. 11PCh. 10 - Prob. 12PCh. 10 - Prob. 13PCh. 10 - Prob. 14PCh. 10 - Prob. 15PCh. 10 - Prob. 16P
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- P has a 20% Interest in the assets and Income of the KP&R Partnership. His Interest in the partnership is $49,000 at the beginning of 2022. During 2022, the partnership Incurred a net loss of $40,000 and P's share of the loss is $29,000. If P receives $11,000 as cash distribution from the partnership on April 30, 2022, determine P's basis in his partnership Interest at the end of 2022. 0$9,000$3,000$5,000arrow_forwardHow much is Tony’s share in the net income of the partnership?arrow_forwardJen, Raks, and Fred are partners with average capital balances during 2019 of P945,000, P477,300, and P324,700, respectively. The partners receive 10% interest on their average capital balances; after deducting salaries of P244,650 to Jen and P165,250 to Fred, the residual profits or loss is divided equally.In 2019, the partnership had a net loss of P251,248 before the interest and salaries to partners. By what amount should Jen’s and Fred’s capital account change – increase (decrease)?arrow_forward
- Jen, Raks, and Fred are partners with average capital balances during 2019 of P945,000, P477,300, and P324,700, respectively. The partners receive 10% interest on their average capital balances; after deducting salaries of P244,650 to Jen and P165,250 to Fred, the residual profits or loss is divided equally. In 2019, the partnership had a net loss of P251,248 before the interest and salaries to partners. By what amount should Jen’s and Fred’s capital account change – increase (decrease)? a. Jen, P56,716; Fred, P64,916 b. Jen, P58,952; Fred, P35,072 c. Jen, P81,688; Fred, P62,470 d. Jen, P60,534; Fred, (P80,896)arrow_forwardNancy and Peter enter into a partnership and decide to share profits and losses as follows: 1 The first allocation is a salary allowance with Nancy receiving $16,000 and Peter receiving $14,000. 2. The second allocation is 20% of the partners' capital balances at year end. On December 31, 2019, the capital balances for Nancy and Peter are $88,000 and $25,000, respectively 3. Any remaining profit or loss is allocated equally. For the year ending December 31, 2019, the partnership reported a net loss of $95,000. What is Peter's share of the net loss? OA. $40,200 OB. $7,300 OC. $21,200 OD. $19,000arrow_forward
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