Sifan and Tabitha each contributed $500 to ST LLC, which is taxed as a partnership. The...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Sifan and Tabitha each contributed $500 to ST LLC, which is taxed as a partnership. The agreement contains all the necessary provisions to qualify under the Alternate Test for economic effect. The partnership agreement provides that all items of income and expense are shared 50/50, except depreciation expense and nonrecourse deductions are allocated 100% to Tabitha. At the time of formation, the partnership purchases a piece of equipment for $5,000, using the $1,000 contributed by the partners and borrowing $4,000 on a nonrecourse loan. The equipment is being depreciated straight-line over ten years. Excluding depreciation, the only item of income and expense earned by the partnership is $400 of net income from the business that uses the equipment. No payments have been made on the principal of the loan. a. Calculate the amount of nonrecourse deductions on the equipment for each of the years 1 through 3. b. Allocate net income and depreciation expense between the partners for each of the years 1 through 3 Sifan and Tabitha each contributed $500 to ST LLC, which is taxed as a partnership. The agreement contains all the necessary provisions to qualify under the Alternate Test for economic effect. The partnership agreement provides that all items of income and expense are shared 50/50, except depreciation expense and nonrecourse deductions are allocated 100% to Tabitha. At the time of formation, the partnership purchases a piece of equipment for $5,000, using the $1,000 contributed by the partners and borrowing $4,000 on a nonrecourse loan. The equipment is being depreciated straight-line over ten years. Excluding depreciation, the only item of income and expense earned by the partnership is $400 of net income from the business that uses the equipment. No payments have been made on the principal of the loan. a. Calculate the amount of nonrecourse deductions on the equipment for each of the years 1 through 3. b. Allocate net income and depreciation expense between the partners for each of the years 1 through 3
Expert Answer:
Answer rating: 100% (QA)
a Nonrecourse deductions on the equipment for each of the years 1 through 3 Year 1 The partnership purchased the equipment for 5000 using 1000 contributed by the partners and borrowing 4000 on a nonre... View the full answer
Related Book For
Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts
Posted Date:
Students also viewed these accounting questions
-
On January 1, Year 1, G and L form a limited partnership to acquire and operate a rental apartment building. L, the limited partner, contributes $90, and G, the general partner, $10. The partnership...
-
Fun Fair of Ventura, Inc. (FF) is organized as a corporation and is taxed as a C corporation with a calendar year-end. FF owns and operates an amusement park in Oxnard, California. Oxnards weather...
-
Determine the breakeven point for each plant. Hambry Enterprises produces a component for recycling uranium used as a nuclear fuel in power plant generators in France and the United States. Use the...
-
A non-uniform magnetic field exerts a net force on a magnetic dipole. A strong magnet is placed under a horizontal conducting ring of radius r that carries current I as shown in Figure P29.17. If the...
-
In Problems 1-10, find the indicated values of the functions f{x,y) = 2x + 7y - 5 and g(x,y ) = 88/x2 + 3y g(-2, 0)
-
In 2014, Barker contacted Price about a van Price had advertised for sale. The advertisement described the van as a 1994 Ford E350. Barker and Price agreed to meet, and, on April 9, Barker inspected...
-
Terrific Comfort Specialists, Inc., reported the following stockholders' equity on its balance sheet at June 30, 2012: Requirements 1. Identify the different issues of stock that Terrific has...
-
Let's use this discussion to discuss any problems you are having with the material as you prepare for the final exam. We're also going to use the discussion to complete a required activity with your...
-
Perform normalization by writing UNF, 1NF, 2NF and 3NF for the following user views. Please provide the answer in both table and schema form for each (UNF, 1NF, 2NF and 3NF) StorelD S101 S101 S101...
-
Which of the following is the strength required to resist and control the resistance in the downward phase of a movement? Isometric Speed Concentric Eccentric
-
I e) The figure below shows part of the path of a ray of light, PQR, travelling through an optical fibre. The optical fibre consists of a fibre of denser transparent material, coated with a layer of...
-
Consider a beaker in which a thick layer of oil ( ( po = 7 4 0 . = 7 4 0 . kg / / m ? ) ? ) is poured on top of another thick layer of syrup ( ( ps = 1 3 2 0 = 1 3 2 0 kg / / m 3 ) . 3 ) . The two do...
-
A 0.27 kg slab of fine mahogany wood block is held against a wall at rest. The coefficient of static friction between the wall and the mahogany slab is 0.43. A spring of spring constant 115 N/m is...
-
Consider a person applying a horizontal force to a refrigerator on a level floor. Although they are pushing, there is enough friction that the refrigerator does not move. Check all of the following...
-
A 2.0 kg box of snickers is attached to a spring and placed on a 65 inclined plane hanging at rest. The spring has a spring constant of 20 N/m. The coefficient of static friction between the box and...
-
Michaela has saved $400 per month for the last three years in savings account earning 0.5% compounded annually. If he plans to leave the accumulated savings for 5 years in the saving account at 6% of...
-
A city maintains a solid waste landfill that was 12 percent filled at the end of Year 1 and 26 percent filled at the end of Year 2. During those periods, the government estimated that total closure...
-
Distinguish between a partners rights in specific partnership property and a partners interest in the partnership.
-
The validly executed will of John Dane contained the following provision: I give and devise to my daughter, Mary, Redacre for and during her natural life and, at her death, the remainder to go to...
-
Civil Code 1719, subdivision (a) provides in part that any person who draws a check that is dishonored due to insufficient funds shall be liable to the payee for the amount owing upon the check and...
-
Profit equalisation reserve (PER) is used for: a. Smoothing the profit earned on the investments b. Minimising the variance in return on investments c. Preserving the capital of investment account...
-
After giving the Mudaribs share, a specific proportion of distributable profits is allocated to which reserve: a. Profit equalisation reserve (PER) b. Investment risk reserve (IRR) c. Both a and b d....
-
The journal entry for the recognition of unrestricted investment account in the books of the IFI would be: a. Debit cash, Credit liability b. Debit cash, Credit investment account (quasi-equity) c....
Study smarter with the SolutionInn App