Jill and Tilly Masterson share the same last name, but are not related. They met each...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Jill and Tilly Masterson share the same last name, but are not related. They met each other a number of years previously when they attended the Canadian Memorial Chiropractic College in Toronto. Last year, they discovered that both had moved to Edmonton and, over coffee, they learned that neither was happy in the practice where they work. They decided to create a partnership and go out on their own. Masterson Chiropractic Services started business at the beginning of the current year. Jill contributed most of the capital for the new partnership, so it was determined that she will receive 75 per cent of any capital gains or dividends received by the partnership. The partnership agreement was set up at the beginning of 20XX and calls for business income to be shared equally. Because local interests are important to both of them, the partnership makes some charitable contributions, which are also shared equally per the agreement. For the year ending December 31, 20XX, their results, prepared on a GAAP basis, are as follows: Masterson Chiropractic Services Partnership Income Statement Year Ending December 31, 20XX Revenues $1,000,000 Expenses: Office rent S 84,000 Office supplies 15,000 Amortization 32,000 Business meals and entertainment 18,000 Charitable donations 28,000 Staff salaries 70,000 Salary to Jill 175,000 Salary to Tilly 175,000 597,000 Net Business Income $403,000 Other income: Capital gains S 15,000 Eligible Dividends Received 25,000 40,000 Accounting net income $443,000 Other Information 1. Jill and Tilly have decided to use the ITA 34-election to report Taxable Income on a billed basis. Included in the revenue reported for accounting purposes is $76,000. This is the first year of operation; therefore, there was no unbilled WIP balance on January 1. 2. Jill and Tilly wish to deduct maximum CCA for the year, which has been calculated at $43,000. Required A. Calculate the amount of income from the partnership that would be included in the Net Income for Tax Purposes for Jill and Tilly. ( 24 marks) B. Indicate the amount of any federal tax credits that would be available to Jill and Tilly as a result of their interest in the partnership. ( 6 marks) Jill and Tilly Masterson share the same last name, but are not related. They met each other a number of years previously when they attended the Canadian Memorial Chiropractic College in Toronto. Last year, they discovered that both had moved to Edmonton and, over coffee, they learned that neither was happy in the practice where they work. They decided to create a partnership and go out on their own. Masterson Chiropractic Services started business at the beginning of the current year. Jill contributed most of the capital for the new partnership, so it was determined that she will receive 75 per cent of any capital gains or dividends received by the partnership. The partnership agreement was set up at the beginning of 20XX and calls for business income to be shared equally. Because local interests are important to both of them, the partnership makes some charitable contributions, which are also shared equally per the agreement. For the year ending December 31, 20XX, their results, prepared on a GAAP basis, are as follows: Masterson Chiropractic Services Partnership Income Statement Year Ending December 31, 20XX Revenues $1,000,000 Expenses: Office rent S 84,000 Office supplies 15,000 Amortization 32,000 Business meals and entertainment 18,000 Charitable donations 28,000 Staff salaries 70,000 Salary to Jill 175,000 Salary to Tilly 175,000 597,000 Net Business Income $403,000 Other income: Capital gains S 15,000 Eligible Dividends Received 25,000 40,000 Accounting net income $443,000 Other Information 1. Jill and Tilly have decided to use the ITA 34-election to report Taxable Income on a billed basis. Included in the revenue reported for accounting purposes is $76,000. This is the first year of operation; therefore, there was no unbilled WIP balance on January 1. 2. Jill and Tilly wish to deduct maximum CCA for the year, which has been calculated at $43,000. Required A. Calculate the amount of income from the partnership that would be included in the Net Income for Tax Purposes for Jill and Tilly. ( 24 marks) B. Indicate the amount of any federal tax credits that would be available to Jill and Tilly as a result of their interest in the partnership. ( 6 marks)
Expert Answer:
Answer rating: 100% (QA)
Income tax is a tax levied on the income of individuals corporations trusts and other legal entities Income could be from different sources it might b... View the full answer
Related Book For
South Western Federal Taxation 2015 Essentials of Taxation Individuals and Business Entities
ISBN: 9781285438290
18th edition
Authors: James Smith, William Raabe, David Maloney, James Young
Posted Date:
Students also viewed these accounting questions
-
A number of years ago, Kay acquired an interest in a partnership in which she is not a material participant. Kays basis in her partnership interest at the beginning of 2013 is $40,000. Kays share of...
-
A number of years ago, Kay acquired an interest in a partnership in which she is not a material participant. Kay's basis in her partnership interest at the beginning of 2015 is $40,000. Kay's share...
-
A number of years ago, Kay acquired an interest in a partnership in which she is not a material participant. Kay's basis in her partnership interest at the beginning of 2014 is $40,000. Kay's share...
-
A square garden has an area of 900 square feet. If a sprinkler (with a circular pattern) is placed in the center of the garden, what is the minimum radius of spray the sprinkler would need in order...
-
A rock is dropped in water, and waves spread over the flat surface of the water. What becomes of the energy in these waves when they die out?
-
What is the least common multiple of 3, 4a, 5b, and 6ab? A. 15ab B. 60ab C. 60a 2 b D. 120ab E. 120a 2 b
-
Consider the incompressible, two-dimensional flow of a nonviscous fluid between the boundaries shown in Fig. P6.22. The velocity potential for this flow field is \[ \phi=x^{2}-y^{2} \] (a) Determine...
-
The unadjusted trial balance for Sierra Corp. is shown in Illustration 4-4. In lieu of the adjusting entries shown in the text at October 31, assume the following adjustment data. 1. Advertising...
-
Garth Brooks is an investigative journalist employed by the Victorian Investigator, an online subscription news service. He is contacted by a personal assistant to an MP who wishes to remain...
-
1. Ms. Jones now asks Rosa to look at the ratio analysis of Readers' Publishing's balance sheet for the last quarter and interpret the result. "Our balance sheet showed cash of $20,000, cash...
-
Returns Year Y 1 13% 18% 2 27 28 3 8 10 4 -20 -25 5 10 19 Using the returns shown above , calculate the arithmetic average returns ,the variances, and the standard deviations for X and Y.
-
Is Cancer Big BusinessThis is a documentary about medical treatment. Now, my bias is I don't trust the FDA, or big pharmaceutical companies or Government. I have no problem with companies making...
-
After reviewing the video, read the two articles linked below,reflect on the following questions and share your responses with the class: https://youtu.be/EyMT08mD7Ds Article 1: Signs your...
-
Date of Report (Date of earliest event reported) Nov 3, 2023 2. SEC Identification Number 1177 3. BIR Tax Identification No. 000-768-480-000 4. Exact name of issuer as specified in its charter Globe...
-
Personal Financing and Investing Application for beginners. Give me full explanation on this point:- 1. Create a quality audit process and procedure
-
Why would a decision maker be indifferent when given a volume number that is the "indifference point" when comparing two processes?
-
help me reword and help organize this paragprah. The () are the comments and corrections that needs to be fixed. Rapuano, Rina. "Doctors Say Cell Phones and Kids Can Be a Healthy Mix." TLC.Com,...
-
Should U.S. antidumping laws be stated in terms of average total costs or average variable costs?
-
Once its new facilities are finished, the Church of the Good Samaritan moves from downtown Madison City to the suburbs. Instead of disposing of the old location, the church leases it to a former...
-
Mini, in Problem 16, reports $800,000 of pretax book net income in 2015. Mini did not deduct any bad debt expense for book purposes but did deduct $15,000 in bad debt expense for tax purposes. Mini...
-
Swift Corporation distributes land (basis of $55,000 and fair market value of $120,000) to Sam and cash ($240,000) to Allison in exchange for part of their stock. Other shareholders do not redeem any...
-
Assess two different quantitative measures on the temptation traditional model and temptation stable analysis patterns, and explain the differences between each of the measures.
-
What do you think are the implementation issues for the AnyUnit BO, when used in the Temptation stable analysis pattern?
-
Draw with a class diagram and describe the applicability of the temptation SAP in a scenario, where the YouTube channel is trying to tempt people to come and watch the uploaded videos, subscribe to...
Study smarter with the SolutionInn App