Individual Income Taxes
43rd Edition
ISBN: 9780357109731
Author: Hoffman
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 9, Problem 15DQ
Paul wholly owns and operates an office supplies business and a printing/shipping business through separate entities. The office supplies business and printing/shipping business share centralized purchasing to obtain volume discounts and share a centralized accounting office that performs all necessary accounting for both businesses (including preparing financial statements, paying bills, collecting receivables, and preparing payrolls for both businesses). Paul maintains a website that promotes both businesses. The businesses operate in separate spaces in the same building (next to each other), but share an office and a shipping/receiving space at the rear of the building and an opening in the shared inside wall that allows customers to move between the businesses without going outside. Each business owns its own equipment and employs its own staff. May Paul aggregate these businesses for purposes of the QBI deduction? Explain.
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Ron Marden and Tip Baker operate separate auto repair shops. On January 1, 2020, they decide to combine their separate businesses which were operated as proprietorships to form M & B Auto Repair, a partnership. Information from their separate balance sheets is presented below:
Marden Auto Repair
Baker Auto Repair
Cash
$10,600
$14,500
Accounts receivable
12,800
10,300
Allowance for doubtful accounts
1,500
3,200
Accounts payable
5,500
5,900
Notes payable
—
3,000
Salaries and wages payable
1,400
1,500
Equipment
12,400
24,400
Accumulated depreciation—equipment
2,800
4,400
It is agreed that the expected realizable value of Marden’s accounts receivable is $11,300 and Baker’s receivables is $7,100. The fair value of Marden’s equipment is $13,800 and the value of Baker’s equipment is $19,500. It is further agreed that the new partnership will assume all liabilities of the proprietorships with the exception of…
Ron Marden and Tip Baker operate separate auto repair shops. On January 1, 2020, they decide to combine their separate businesses which were operated as
proprietorships to form M & B Auto Repair, a partnership. Information from their separate balance sheets is presented below:
Cash
Accounts receivable
Allowance for doubtful accounts
Accounts payable
Notes payable
Salaries and wages payable
Equipment
Accumulated depreciation-equipment
Marden Auto Repair
$10,000
12,000
1,000
5,000
equity of
1,000
12,000
2,000
It is agreed that the expected realizable value of Marden's accounts receivable is $11,000 and Baker's receivables is $7,000. The fair value of Marden's equipment is $13,000 and the value of Baker's
equipment is $20,000. It is further agreed that the new partnership will assume all liabilities of the proprietorships with the exception of the notes payable on Baker's balance sheet which he will pay
himself.
; accounts payable
; total liabilities
Baker Auto Repair
$14,000
10,000
500…
When operating as a proprietary business, which of the following is true?
Select one:
a. All debt in the business may or may not be the responsibility of the owner which will depend on accounting policies
b. All the business debt is not the responsibility of the owner because they are separate entities
c. It is common practice to keep the business and personal records together because the owner and the business are considered as one
d. All the business debt is considered as the owners debt
Chapter 9 Solutions
Individual Income Taxes
Ch. 9 - Prob. 1DQCh. 9 - Mason performs services for Isabella. In...Ch. 9 - Milton is a resident of Mobile (Alabama) and is...Ch. 9 - In 2017, Emma purchased an automobile, which she...Ch. 9 - Prob. 5DQCh. 9 - Prob. 6DQCh. 9 - Prob. 7DQCh. 9 - Prob. 8DQCh. 9 - Prob. 9DQCh. 9 - Prob. 10DQ
Ch. 9 - Prob. 11DQCh. 9 - Prob. 12DQCh. 9 - Prob. 13DQCh. 9 - Prob. 14DQCh. 9 - Paul wholly owns and operates an office supplies...Ch. 9 - Prob. 16DQCh. 9 - Prob. 17DQCh. 9 - Lara uses the standard mileage method for...Ch. 9 - Fred, a self-employed taxpayer, travels from...Ch. 9 - Prob. 20CECh. 9 - Prob. 21CECh. 9 - In 2019, Robert entertains four key clients and...Ch. 9 - In 2019, the CEO of Crimson, Inc., entertains...Ch. 9 - Prob. 24CECh. 9 - Cindy maintains an office in her home that...Ch. 9 - Prob. 26CECh. 9 - Prob. 27CECh. 9 - Prob. 28PCh. 9 - Prob. 29PCh. 9 - Prob. 30PCh. 9 - In June of this year, Dr. and Mrs. Bret Spencer...Ch. 9 - Prob. 32PCh. 9 - On Thursday, Justin flies from Baltimore (where...Ch. 9 - Monica, a self-employed taxpayer, travels from her...Ch. 9 - Prob. 35PCh. 9 - Prob. 36PCh. 9 - Prob. 37PCh. 9 - Prob. 38PCh. 9 - Prob. 39PCh. 9 - Prob. 40PCh. 9 - Shelly has 200,000 of QBI from her local jewelry...Ch. 9 - Prob. 42PCh. 9 - Prob. 43PCh. 9 - Prob. 44PCh. 9 - Prob. 45PCh. 9 - Prob. 46PCh. 9 - Ben and Molly are married and will file jointly....Ch. 9 - Prob. 48PCh. 9 - Prob. 49PCh. 9 - Prob. 50PCh. 9 - David R. and Ella M. Cole (ages 39 and 38,...Ch. 9 - Addison Parker (Social Security number...Ch. 9 - In the current year, Barlow moved from Chicago to...Ch. 9 - Prob. 2CPACh. 9 - Prob. 3CPACh. 9 - Prob. 4CPACh. 9 - Prob. 5CPACh. 9 - Prob. 6CPACh. 9 - Calculate the taxpayers 2019 qualifying business...Ch. 9 - Prob. 8CPA
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