Partner Q is a partner in Partnership QRST. The partnership agreement states that Q's share of income
Question:
Partner Q is a partner in Partnership QRST. The partnership agreement states that Q's share of income and losses is 30 percent. Q provides services to QRST. Both QRST and Q use a calendar year for tax purposes. The partnership's financial records for the current year show:
Gross profit | $260,000 |
Guaranteed payments to Q | (20,000) |
Life insurance premium for Q | (500) |
Operating expenses | (60,000) |
Charitable contributions | (9,000) |
Net long-term capital gain | 10,000 |
Q is single, has no other income, and no itemized deductions for the year. Q received the $20,000 guaranteed payments and withdrew an additional $10,000 during the year. Q's capital account in the partnership was $50,000 at the beginning of the year. Using Form 1065, page 1 as a guide; calculate QRST's ordinary income for the tax year. Calculate Q's taxable income for the tax year of 2012. Q will not be able to itemize deductions. Calculate Q's capital account in the partnership at the end of the tax year.
College Accounting A Practical Approach
ISBN: 9780134729312
14th edition
Authors: Jeffrey Slater, Mike Deschamps