6.2.2 Ch. 9 - U - $ 1,500.00 Sec 1231 Gains $ 8,000.00 $...

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M&L Accounting Records Gross receipts from sales $ 150,000.00 Cost of Sales $ (220,000.00) Gross profits $ (70,000.00) Guaranteed payments to Mr. Maxfield $ (36,000.00) Interest paid on business debt $ (3,000.00) Dividend income $ 500.00 Tax exempt interest $ 1,500.00 Operating expenses $ (138,000.00) Depreciation expense $ (9,000.00) Sec. 1231 Gains $ 8,000.00 a. Gross profits $ (70,000.00) Guaranteed payments to Mr. Maxfield $ (36,000.00) Interest paid on business debt $ (3,000.00) Operating expenses $ (138,000.00) Depreciation expense $ (9,000.00) Ordinary business loss $ (256,000.00) Mr. Mayfield's ordinary business income $ (128,000.00) b. Mr. Mayfield's ordinary business income $ (128,000.00) Guaranteed payments to Mr. Maxfield $ 36,000.00 Mr. Mayfield's self-employment earnings $ (92,000.00) c. Mr. Mayfield's Initial tax basis $ 100,000.00 Dividend $ 500.00
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Unformatted text preview: $ 1,500.00 Sec. 1231 Gains $ 8,000.00 $ 5,000.00 Key Bank loan $ 60,000.00 M&L repaid loan Dec. 15 $ 10,000.00 $ 50,000.00 $ 25,000.00 $ 130,000.00 Mr. MayFeld's ordinary business income $ (128,000.00) Mr. MayFeld's Tax basis in M&L $ 2,000.00 d. Mr. MaxFeld would noT be required To recognize The $36,000 paymenT M&L would noT deducT or capiTalize any cosTs Mr. Maxfeld Mr. Leland Contributed on Jan. 1 $ 100,000.00 $ 100,000.00 P&L interest 50% 50% Annual guaranteed payment $36,000.00 Key Bank loan $ 60,000.00 Interest paid on Jun. 30 $ 3,000.00 M&L repaid loan Dec. 15 $ 10,000.00 9-17 Ordinary business income (loss) Separately stated to partners Sec. 1231 Gains Assets used in a trade or business and held For more th Mr. Maxfeld porTon oF loan 9-9 han a year...
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