Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Accounting Basics Expert

Karen contributed fully depreciated ($0 basis) property valued at $30,000 to the BKLM General Partnership in exchange for a 40% interest in the partnership. The partnership had $50,000 of liabilities at this time, which were shared in accordance with the partners' interests.
During the first year of partnership operations, BKLM had the following taxable income (100% amounts):
Revenues $ 400,000
Guaranteed payment to Ashley (50,000)
Salary expense (nonpartners) (200,000)
Supplies (40,000)
Insurance (20,000)
Depreciation (no Sec. 179 amounts) (10,000)
Taxable Interest income 20,000
Long-term capital gain 10,000
Non-deductible fines (2,000)

Karen's share of partnership liabilities on the last day of the partnership year was $13,000.

a. Compute Karen's share of the partnership's ordinary income and separately stated items for the year.

b. What is Karen's basis in her partnership interest at the end of the tax year?

c. Assume Karen has come to you for advice at the end of the current year, and she is interested in taking a distribution from the partnership. What is the maximum amount of cash she can withdraw tax-free from the partnership?

d. What is the minimum amount she should withdraw in order to provide her with enough cash to pay any income taxes (ignore self-employment tax) she will owe because of her partnership ownership? Assume she is in the 35% marginal tax bracket (use a flat rate).

e. Assuming Karen works 750 hours per year in the business, what amount of her income from the partnership is subject to self-employment tax?

 

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M941732

Have any Question? 


Related Questions in Accounting Basics

Tf question1under the modified accrual basis of accounting

T/F QUESTION 1 Under the modified accrual basis of accounting, there is no matching principle and no attempt to amortize costs that benefit multiple periods. 2 In fund accounting, expenditures may be classified in differ ...

Conduct a cost analysis of gas versus electric vehicle find

Conduct a cost analysis of gas versus electric vehicle. Find the break-even point assuming gasoline is $3.00/gallon with an average of 22 miles per gallon that costs $25,000. Compared to an electric vehicle for $35,000 t ...

Discussion 1 and 2discussion 1select one of the following

Discussion 1 and 2 Discussion 1 Select one of the following tools: the nine steps in Ackerman and Anderson's roadmap for change, Cummings and Worley's five dimensions of leading and managing change, or the three componen ...

The purpose of an assignment is to ensure that the learner

The purpose of an assignment is to ensure that the Learner is able to: - Demonstrate an understanding of accounting principles. - Systematically record the financial aspects of business transactions. - Prepare financial ...

Palmona co establishes a 220 petty cash fund on january 1

Palmona Co. establishes a $220 petty cash fund on January 1. On January 8, the fund shows $125 in cash along with receipts for the following expenditures: postage, $41; transportation-in, $11; delivery expenses, $13; and ...

Problem 1abc stock has a share price of 150 today all

Problem 1 ABC stock has a share price of $150 today. All rates of interest are 3% per annum on a continuously compounded basis. A one-year European call option on one share of stock struck at $147 is worth $15. Finally, ...

Write a 300- to 500-word response in which you address the

Write a 300- to 500-word response in which you address the following questions from Case, Charitable Contributions and Debt: A Comparison of St. Jude Children's Research Hospital/ALSAC and Universal Health Services: What ...

Individual research papercompany case study assignmentthis

Individual Research Paper Company Case Study Assignment This assignment has a number of learning objectives, sources, and opportunities: 1. You will explore financial performance and investor information available fromva ...

Question 1based upon the narrative describing the case what

Question 1: Based upon the narrative describing the case, what cultural element (per Ferraro) was most likely a major contributing factor to the accident? Question 2: If you were brought to the investigation, what recomm ...

Illustrative question- shane brookson july 1 2015 shane

Illustrative Question- Shane Brooks On July 1, 2015, Shane Brooks established an interior decorating business, Premium Designs. During the month, the following transactions are completed: July  1. Transferred cash from a ...

  • 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

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen