Ben Conway, Ida Chan, and Clair Scott formed CCS Consulting this year by making capital contributions of $266,000, $302,000, and $196,000, respectively. They anticipate annual profit of $458,400 and are considering the following alternative plans of sharing profits and losses: Equally; In the ratio of their initial investments; or Salary allowances of $125,000 to Conway, $96,000 to Chan, and $71,000 to Scott and interest allowances of 10% on initial investments, with any remaining balance shared equally. Required : 1. Use the schedule to show how a profit of $458,400 would be distributed under each of the alternative plans being considered. (Enter all amounts as positive values.)

Ben Conway, Ida Chan, and Clair Scott formed CCS Consulting this year by making capital contributions of $266,000, $302,000, and $196,000, respectively. They anticipate annual profit of $458,400 and are considering the following alternative plans of sharing profits and losses: Equally; In the ratio of their initial investments; or Salary allowances of $125,000 to Conway, $96,000 to Chan, and $71,000 to Scott and interest allowances of 10% on initial investments, with any remaining balance shared equally. Required : 1. Use the schedule to show how a profit of $458,400 would be distributed under each of the alternative plans being considered. (Enter all amounts as positive values.)

SWFT Individual Income Taxes

43rd Edition

ISBN:9780357391365

Author:YOUNG

Publisher:YOUNG

Chapter20: Corporations And Parterships

Section: Chapter Questions

Problem 31CE

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