Ask Question, Ask an Expert


Ask Accounting Basics Expert

On January 1, 20X1, Clark and Lois each contributed $110,500 to form the Kal-El general partnership, and the partnership borrowed $45,000 from Metropolis Bank. Their partnership agreement states that they will each receive a 50% profits and loss interest. The partnership agreement also provides that Clark will receive an annual $52,000 guaranteed payment.

Kal-El began business on January 1, 20X1. For its first taxable year, its accounting records contained the following information.

Gross receipts from sales $278,000
Cost of sales (222,000)
Gross profit 56,000

Guaranteed payments to Clark (52,000)
Bad debt expense allowed for tax purposes (3,500)
Tax exempt interest 1,550
Operating expenses (108,000)
Depreciation expense (9,500)
Long-term capital gains 800
Section 1231 losses (12,600)

Kal-El repaid $7,000 of the loan on December 15, 20X1. Each of the partners also received cash distributions of $5,000 from Kal-El in 20X1.

What is Clark's tax basis in his Kal-El interest on December 31, 20X1?


Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M946404

Have any Question? 

Related Questions in Accounting Basics

Case title subsequent events - disclosure or financial

Case Title: Subsequent Events - Disclosure or Financial Statement Adjustment? Company ABC is a December 31 calendar year-end manufacturer of flammable liquids and powders with its corporate offices in Pennsylvania and ma ...

Fraud triangle and red flagsread the following case study

Fraud Triangle and Red Flags Read the following case study and respond according to the instructions at the end: Plutonium was an Internet start-up company founded in 1988 at the beginning of the technology boom. One of ...

Lamp light company maintains and repairs warning lights

Lamp Light Company maintains and repairs warning lights, such as those found on radio towers and lighthouses. Lamp Light Company prepared the following end-of-period spreadsheet at December 31, 2016, the end of the fisca ...

1 introductionthis coursework assignment carries 30 of the

1. Introduction This coursework assignment carries 30% of the total of 100% for this Module. It comprises one requirement with one task. It is an individual not a group-based assignment. The task/requirement is detailed ...

Use the following transactions and additional information

Use the following TRANSACTIONS AND ADDITIONAL INFORMATION to complete the General Journal Entries, Ledger, Worksheet and Financial Statements for the first of the month of operations for The Golf Club. PERPETUAL INVENTOR ...

1 a share of common stock is not a derivative but an option

1. A share of common stock is not a derivative, but an option to buy the stock is a derivative because the value of the option is derived from the value of the stock. True False 2. Hedge funds are somewhat similar to mut ...

Wayne and maria file a joint tax return on which they

Wayne and Maria file a joint tax return on which they itemize their deductions and report AGI of $50,000. During the year they incurred $1,500 of medical expenses when Maria broke her leg. Furthermore, their dentist info ...

Discussionpart 1please respond the following question no

DISCUSSION PART 1 PLEASE RESPOND THE FOLLOWING QUESTION NO LESS THEN 350 WORDS (ORIGINAL WORK, NO PLAGIARISM, 1 Reference "Financial Statement Analysis" Please respond to the following: • Evaluate at least factors that m ...

Question 1 if a cpa firm is being sued for common law fraud

Question 1. If a CPA firm is being sued for common law fraud by a third party based on materially false financial statements, which of the following is the best defense the accountants could assert? A disclaimer containe ...

Accounting and businesshow does the business maintain its

ACCOUNTING AND BUSINESS How does the business maintain its financial records? Who does the accounting for the business? What accounting or records is used? Who periodically reviews and analyzes the accounting records? Wh ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate