Holly and Luke formed a partnership, investing $240,000 and $80,000, respectively. Determine their participation in the year's net income of $200,000 under each of the following independent assumptions: a. No agreement concerning division of net income; b. Divided in the ratio of original capital investment; c. Interest at the rate of 1596 allowed on original investments and the remainder dividied in the ratio of 2:3 d. Salary allowances of $50,0000 and $70,000, respectively, and the balance divided equally; e. Allowance of interest at the rate of 1596 on original investments, salary allowances of $50,000 and $70,000, respectively, and the remainder divided equally. DO NOT USE A DECIMAL WITH ZEROES FOR WHOLE DOLLAR AMOUNTS AND USE COMMAS APPROPRIATELY. Holly Luke Total a. b. 24 C. d.

Holly and Luke formed a partnership, investing $240,000 and $80,000, respectively. Determine their participation in the year's net income of $200,000 under each of the following independent assumptions: a. No agreement concerning division of net income; b. Divided in the ratio of original capital investment; c. Interest at the rate of 1596 allowed on original investments and the remainder dividied in the ratio of 2:3 d. Salary allowances of $50,0000 and $70,000, respectively, and the balance divided equally; e. Allowance of interest at the rate of 1596 on original investments, salary allowances of $50,000 and $70,000, respectively, and the remainder divided equally. DO NOT USE A DECIMAL WITH ZEROES FOR WHOLE DOLLAR AMOUNTS AND USE COMMAS APPROPRIATELY. Holly Luke Total a. b. 24 C. d.

Individual Income Taxes

43rd Edition

ISBN:9780357109731

Author:Hoffman

Publisher:Hoffman

Chapter11: Investor Losses

Section: Chapter Questions

Problem 35P: LO.2 In the current year, Bill Parker (54 Oak Drive, St. Paul, MN 55164) is considering making an...

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Liquidating partnershipscapital deficiency Nettles, King, and Tanaka are partners sharing income 3:2:1. After the firm's loss from liquidation is distributed, the capital account balances were as follows: Nettles, 15,000 Dr.; King, 46,000 Cr; and Tanaka, 71,000 Cr. If Nettles is personally bankrupt and unable to pay any of the 15,000, what will be the amount of cash received by King and Tanaka upon liquidation?
LO.2 In the current year, Bill Parker (54 Oak Drive, St. Paul, MN 55164) is considering making an investment of 60,000 in Best Choice Partnership. The prospectus provided by Bills financial planner indicates that the partnership investment is not a passive activity and that Bills share of the entitys loss in the current year will likely be 40,000, whereas his share of the partnership loss next year will probably be 25,000. Write a letter to Bill in which you indicate how the losses would be treated for tax purposes in the current year and the following year.
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