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Part $1$

Brandon Diaz$,$ Matt Maddox$,$ and Jameson Knox formed a partnership on April$1,2021.$ The partnership provides engineering services to a variety of clients and has a December $31$ fiscal period. Each partner makes an initial capital contribution of $ $230$ comma $000.$

With respect to the various items that must be allocated to individual$$ partners, the partnership agreement contains the following$$ provisions:

Provisions of Partnership Agreement

Business$$ income: The three partners will equally share the business profits.

Capital$$ gains: Capital gains realized by the partnership will be shared equally by Matt Maddox and Jameson Knox.

Eligible$$ dividends: All of the eligible dividends received by the partnership will be allocated to Brandon Diaz.

Charitable$$ contributions: Charitable contributions will be allocated equally to the three partners.

Additional information

For the period April$1,2021,$ to December$31,2023,$ the following income tax information is$$ available:

bullet The partnership business profits are $ $233$ comma $340.$

bullet The partnership realized a $ $18$ comma $460$ capital gain.

bullet The partnership received eligible dividends totalling $ $4$ comma $685.$

bullet During the $2023$ fiscal$$ period, the partnership made $ $8$ comma $610$ in charitable donations.

bullet Additional capital was required to expand the$$ business, and,$$ therefore, each partner contributed an additional $ $77$ comma $000$ in cash in the $2023$ fiscal period.

bullet Partner withdrawals in the $2023$ fiscal period were as$$ follows: Brandon Diaz$,$ $ $110$ comma $000$; Matt Maddox$,$ $ $232$ comma $000$; and Jameson Knox$,$ $ $56$ comma $500.$

All of the above amounts represent the relevant amounts for income tax$$ purposes, so no reconciliation adjustments are necessary.

Near the end of $2023,$ Jameson Knox has announced that he will be withdrawing from the partnership effective January$1,2024.$ After some$$ negotiations, each of the other partners agreed to purchase$$ one$-$half of his interest in the partnership for $ $172$ comma $000$apiece$,$ a total of $ $344$ comma $000.$ The payments are to be made on February$1,2024.$ The partnership has business income of $ $21$ comma $600$ in January $2024.$

Jameson incurred legal and accounting fees in connection with the sale of his partnership interest of $ $1$ comma $850.$

Requirement A$.$ Calculate the ACB of Jameson$\text{'}$s partnership interest as of January$1,2024.($Round your answers to the nearest whole$$ dollar.$)$

Initial capital contribution

Additional capital contribution

Total capital contribution

Drawings

Business income

Capital gains to Maddox and Knox

Dividends to Diaz

Charitable donations

ACB of Jameson's partnership interest

Part $2$

Requirement B$.$ Determine the amount of Jameson$\text{'}$s capital gain or capital loss on the disposition of his partnership interest. Explain how this$$ amount, and any other amounts related to the$$ partnership, will be treated for $2024.$

Calculate Jameson$\text{'}$s capital gain$($loss$)$ and taxable capital gain$($loss$)$ on the disposition of his partnership interest. $($Round your answers to the nearest whole$$ dollar.$)$

Proceeds of disposition

ACB

Outlays and expenses

Subtotal

Capital gain

Inclusion rate

$(1-$: $2)$

Taxable capital gain

Part $3$

Complete the below sentences.

The gain$($loss$)$ on the disposition of the partnership interest would be included in Jameson Knox's $2023$ net income as

$$

a taxable capital gain.

business income.

partnership income.

personal income.

Jameson

$$

would include any partnership income for January $2024.$

would not include any partnership income for January $2024.$

This is because he

$$

was a partner during the month.

was not a partner during the month.

Part $4$

Requirement C$.$ Indicate how the ACB of each remaining$$ partner's interest will be affected by the withdrawal of Jameson from the partnership.

Each partner

$$

pays Jameson for one$-$half of Jameson's interest.

receives money for selling one$-$half of Jameson's interest.

$$So$,$ the ACB of each remaining$$ partner's interest

$$

decreases.

increases.

stays the same.

Part $5$

Determine the change in the ACB of each remaining$$ partner's interest.

Change in the ACB of each remaining partner's interest: