The AB investment partnership agreement provides for equal sharing of gains or losses from the sale of securities, ordinary taxable income is to be allocated all to A (whose marginal tax rate is 15%) and tax exempt income is to be allocated 20% to A and 80% to B (whose marginal tax rate is 36%). During the year the partnership no capital gain or losses, $20,000 of taxable income from dividends on stock and $20,000 from tax exempt interest on state bonds. (A) Determine the consequences for partner A for each of the above income sources. (B) Determine how your answer in part A would differ, if at all, if the agreement provides 20 % of the ordinary taxable income in partner A is to get all of the tax exempt income and 20% addition to equal division of capital gains and losses.
The AB investment partnership agreement provides for equal sharing of gains or losses from the sale of securities, ordinary taxable income is to be allocated all to A (whose marginal tax rate is 15%) and tax exempt income is to be allocated 20% to A and 80% to B (whose marginal tax rate is 36%). During the year the partnership no capital gain or losses, $20,000 of taxable income from dividends on stock and $20,000 from tax exempt interest on state bonds.
(A) Determine the consequences for partner A for each of the above income sources.
(B) Determine how your answer in part A would differ, if at all, if the agreement provides 20 % of the ordinary taxable income in partner A is to get all of the tax exempt income and 20% addition to equal division of
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