PROBLEM C and D are partners who share income and losses equally. C has an outside basis of $5,000 in his partnership interest and D has an outside basis of $15,000 in her partnership interest. (a) During the current year the partnership has gross income of $40,000 and expenses of $60,000. What are the tax results to C and D? (b) What are the results to C and D in the succeeding year when the partnership has $20,000 of net profits? (c) How might C have alleviated his problem in the first year? (d) What result in (a), above, if the net $20,000 loss consists of $15,000 of ordinary loss and $5,000 of long-term capital loss? (e) What result to S, C's son, in (a), above, if C gives his interest in the partnership to S on the first day of a year in which the partnership has profits of $20,000?
PROBLEM C and D are partners who share income and losses equally. C has an outside basis of $5,000 in his partnership interest and D has an outside basis of $15,000 in her partnership interest. (a) During the current year the partnership has gross income of $40,000 and expenses of $60,000. What are the tax results to C and D? (b) What are the results to C and D in the succeeding year when the partnership has $20,000 of net profits? (c) How might C have alleviated his problem in the first year? (d) What result in (a), above, if the net $20,000 loss consists of $15,000 of ordinary loss and $5,000 of long-term capital loss? (e) What result to S, C's son, in (a), above, if C gives his interest in the partnership to S on the first day of a year in which the partnership has profits of $20,000?
SWFT Essntl Tax Individ/Bus Entities 2020
23rd Edition
ISBN:9780357391266
Author:Nellen
Publisher:Nellen
Chapter18: Comparative Forms Of Doing Business
Section: Chapter Questions
Problem 37P
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Transcribed Image Text:PROBLEM
C and D are partners who share income and losses equally. C has an
outside basis of $5,000 in his partnership interest and D has an outside basis
of $15,000 in her partnership interest.
(a) During the current year the partnership has gross income of
$40,000 and expenses of $60,000. What are the tax results to
C and D?
(b) What are the results to C and D in the succeeding year when
the partnership has $20,000 of net profits?
(c) How might C have alleviated his problem in the first year?
(d) What result in (a), above, if the net $20,000 loss consists of
$15,000 of ordinary loss and $5,000 of long-term capital loss?
(e) What result to S, C's son, in (a), above, if C gives his interest
in the partnership to S on the first day of a year in which the
partnership has profits of $20,000?
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