Scott and Dave each invested $100,000 cash when they formed the SD Partnership and became equal partners.
Question:
Scott and Dave each invested $100,000 cash when they formed the SD Partnership and became equal partners. They agreed that the partnership would pay each partner a 5% guaranteed payment on his $100,000 capital account. Before the two guaranteed payments, current year results were $23,000 of ordinary income and $14,000 of long-term capital gain. What amount and character of income will Scott and Dave report for the current year from their partnership? Based on the analysis in Example C:9-47, do you think this arrangement of guaranteed payments is a good idea?
Susan, Steve, and Sandy own 15%, 35%, and 50%, respectively, in the SSS Partnership. Susan sells securities for their $40,000 FMV to the partnership. What are the tax implications of the following independent situations?
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