Question
In: Accounting
Luis and Jennifer formed the JL Partnership as equal partners. Each partner contributed cash and property...
Luis and Jennifer formed the JL Partnership as equal partners. Each partner contributed cash and property with a value of $80,000 for partnership operations. As a result of these contributions, Luis had a basis of $80,000 and Jennifer a basis of $60,000 in their partnership interests. At the end of their first year of operations, they had the following results: Gross sales $110,000 Cost of goods sold 75,000 Rent expense 18,000 Employees’ salaries 20,000 Utilities 3,000 Charitable contribution 500 Section 1231 gain 1,000 Tax-exempt interest income 2,000 What is the net income, excluding separately stated items, that each partner is required to report at the end of the year? How is each of the separately stated items treated on the partners’ tax returns? What is each partner’s basis at year-end? Explain how Luis and Jennifer’s initial bases could differ if they both contributed cash and property valued at $80,000.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Jim, one of two equal partners of the JJ Partnership, a general partnership, contributed business property...
Jim, one of two equal partners of the JJ Partnership, a general
partnership, contributed business property with an adjusted basis
to him of $15,000 and a fair market value of $10,000 to the JJ
Partnership. Jim’s capital account was credited with $10,000. The
property later was sold for $12,000. As a result of this sale, how
much gain or loss must Jim report on his personal income tax
return? a. $1,000 gain b. $1,500 loss c. $2,000 gain d. $3,000...
A and B are equal partners in a personal services partnership. Each partner acquired her partnership...
A and B are equal partners in a personal services partnership.
Each partner acquired her partnership interest for cash several
years ago. None of the partnership’s asset sis Section 704(c)
property. The partnership has the following balances sheet:
Assets
Liabilities and Partnerships' Capital
A.B.
FMV
cash
13,000
13,000
Liabilities
2,000
capital
assets
Capital
A.B.
FMV
collectibles
1,000
3,000
A
10,000
15,000
Other
6,000
2,000
B
10,000
15,000
Subtotal
...
A and B are equal partners in a personal services partnership. Each partner acquired her partnership...
A and B are equal partners in a personal services partnership.
Each partner acquired her partnership interest for cash several
years ago. None of the partnership’s assets is Section 704(c)
property. The partnership has the following balance sheet:
Assets
Liabilities and Partners’ Capital
A.B.
F.M.V.
A.B.*
F.M.V.
Cash
$13,000
$12,000
Liabilities:
$2,000
Capital
Assets:
Capital:
Collectibles
1,000
3,000
A
$10,000
15,000
Other
6,000
2,000
B
10,000
15,000
Subtotal
7,000
5,000
Receivables
0
14,000 ...
On January 1, Kirk, Picard, and Sisko formed S. T. Enterprises, a partnership. The partners contributed:...
On January 1, Kirk, Picard, and Sisko formed S. T. Enterprises,
a partnership. The partners contributed: Kirk-Cash
$14,000; Picard-Cash $49,000 and Land $62,000; Sisko-Equipment
$83,000. They share profits and losses 3:2:1, respectively.
Prepare journal entry:
On March 1, Eckert and Kelley formed a partnership. Eckert contributed $74,000 cash, and Kelley contributed...
On March 1, Eckert and Kelley formed a partnership. Eckert
contributed $74,000 cash, and Kelley contributed land valued at
$59,200 and a building valued at $89,200. The partnership also took
Kelley’s $64,000 long-term note payable associated with the land
and building. The partners agreed to share income as follows:
Eckert gets an annual salary allowance of $31,000, both get an
annual interest allowance of 10% of their initial capital
investment, and any remaining income or loss is shared equally. On...
On March 1, Eckert and Kelley formed a partnership. Eckert contributed $92,000 cash, and Kelley contributed...
On March 1, Eckert and Kelley formed a partnership. Eckert
contributed $92,000 cash, and Kelley contributed land valued at
$73,600 and a building valued at $103,600. The partnership also
took Kelley’s $82,000 long-term note payable associated with the
land and building. The partners agreed to share income as follows:
Eckert gets an annual salary allowance of $31,500, both get an
annual interest allowance of 8% of their initial capital
investment, and any remaining income or loss is shared equally. On...
On March 1, Eckert and Kelley formed a partnership. Eckert contributed $94,000 cash, and Kelley contributed...
On March 1, Eckert and Kelley formed a partnership. Eckert
contributed $94,000 cash, and Kelley contributed land valued at
$75,200 and a building valued at $105,200. The partnership also
took Kelley’s $84,000 long-term note payable associated with the
land and building. The partners agreed to share income as follows:
Eckert gets an annual salary allowance of $29,500, both get an
annual interest allowance of 10% of their initial capital
investment, and any remaining income or loss is shared equally. On...
On March 1, Eckert and Kelley formed a partnership. Eckert contributed $81,000 cash, and Kelley contributed...
On March 1, Eckert and Kelley formed a partnership. Eckert
contributed $81,000 cash, and Kelley contributed land valued at
$64,800 and a building valued at $94,800. The partnership also took
Kelley’s $71,000 long-term note payable associated with the land
and building. The partners agreed to share income as follows:
Eckert gets an annual salary allowance of $29,000, both get an
annual interest allowance of 9% of their initial capital
investment, and any remaining income or loss is shared equally. On...
1. . A, B, and C are partners. Each originally contributed $5,000 to the partnership. If,...
1. . A, B, and C are partners. Each originally contributed
$5,000 to the partnership. If, after dissolution and liquidation,
the firm's assets are $100,000 and its debts to creditors are
$40,000, how much will be C's share of the assets if according to
the partnership contract they are to be divided equally among the
partners? Explain.
2. Without authority from his co-partners B and C, and in breach
of their partnership agreement, A assigns a truck owned by the...
A partnership is formed between partners A and B. A invests cash of $100,000, and B...
A partnership is formed between partners A and B. A invests cash
of $100,000, and
B invests several assets with the following book and fair
values. These assets are:
1.Office space with book and fair values of $40,000 and $60,000
respectively.
2. Office furniture and equipment with book and fair values of
$30,000 and
$20,000 respectively.
3. Accounts Receivable with book and fair values of $20,000 and
$18,000
respectively.
Each partners account is to be credited with 5% of their...
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