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C12-Chp-10-1B-Ptshp-Operate-2012

# C12-Chp-10-1B-Ptshp-Operate-2012 - Chapter 10B Partnership...

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Chapter 10B. Partnership Operation C11-Chp-10-1B-Ptshp-Operate-2011 Edited January 4, 2011 This file covers pages 20 through 44 Howard Godfrey, Ph.D., CPA Professor of Accounting Copyright 2011

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The student should be able to: 4. Differentiate between items that must be separately stated and those that are included in ordinary income or loss for partnerships that are not electing large partnerships. 5. Calculate a partner's distributive share of partnership income, gain, loss, deduction or credit items.
6. Explain the requirements for a special partnership allocation. 7. Calculate a partner's basis in a partnership interest. 8. Determine the limitations on a partner's deduction of partnership losses. 9. Determine the tax consequences of a guaranteed payment.

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10. Explain the requirements for the holder of a partnership interest to be recognized as a partner in a family partnership. 11. Determine the allocation of partnership income between a donor and a donee of a partnership interest. 12. Determine the requirements for filing a partnership tax return.
4. Differentiate between items that are separately stated and those that are included in ordinary income or loss for partnerships that are not electing large partnerships.

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6 Practice Question In computing the ordinary business income of a partnership, a deduction is allowed for: a. Net operating loss deduction. b. Depreciation Expense c. Short-term capital losses. d. Gifts to qualified charities.
7 Practice Question In computing the ordinary business income of a partnership, a deduction is allowed for: b. Depreciation Expense

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JM Partners -1 John and his wife Mary are equal partners in JM Enterprises, which operates as a partnership. How would they report the income and loss items from partnership operations shown on the next slide?
JM Partners - 2 Consulting revenue \$125,000 Travel expenses 40,000 Transportation 3,000 Advertising 7,000 Office expense 3,000 Telephone 1,000 Dividend Income 5,000 Interest Income 2,000 Charitable contribution 1,000 Political contribution 6,000 What is Partnership Income?

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JM Partners-3 Information Form 1065 Sch- K Consult rev. \$125,000 Travel exp. 40,000 Transport. 3,000 Advertising 7,000 Office exp. 3,000 Telephone 1,000 Dividends 5,000 Interest Income 2,000 1,000 Political cont. 6,000 Ordinary Income
JM Partners-3A Information Form 1065 Sch- K Consult rev. \$125,000 \$125,000 Travel exp. (40,000) (40,000) Transport. (3,000) (3,000) Advertising (7,000) (7,000) Office exp. (3,000) (3,000) Telephone (1,000) (1,000) Dividends 5,000 5,000 Interest 2,000 2,000 Char. cont. (1,000) (1,000) Political cont. (6,000) (6,000) Ordinary Income \$71,000

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JM Partners-4 The \$71,000 of items that make up net income on Schedule C in the preceding problem will all be reported as net income on Form 1065. The dividends, interest and charitable contributions will be reported on Schedule K (Form 1065) as separately stated items and the political contribution will be reported as a nondeductible item.
13 JM Partners-5 John and Mary will each receive a Schedule K-1 reporting their shares of the net income, separately stated items, and nondeductible item.

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C12-Chp-10-1B-Ptshp-Operate-2012 - Chapter 10B Partnership...

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