Calculate a partners distributive share of partnership income gain loss

Calculate a partners distributive share of

This preview shows page 14 - 26 out of 82 pages.

5. Calculate a partner's distributive share of partnership income, gain, loss, deduction or credit items.
Image of page 14
Gil & Bill partnership had net incomeper books of $37,000 which included:Dividend income$1,000ST capital loss(4,000)Section 1231 gain7,000Ordinary income(sec. 1245 recapture) 1,500Interest income 1,000Ordinary Income?They share profits and losses equally.What is partnership ordinary income?
Image of page 15
Gil & Bill partnership had net income per books of $37,000 which included: Ordinary Book income $37,000 Dividend income $1,000 ST capital loss (4,000) Section 1231 gain 7,000 Ordinary income (sec. 1245 recapture) 1,500 Interest income 1,000 Ordinary Income They share profits and losses equally. What is partnership ordinary income
Image of page 16
Gil & Bill partnership had net income per books of $37,000 which included: Ordinary Book income $37,000 Adjustments Dividend income $1,000 ($1,000) ST capital loss (4,000) 4,000 Section 1231 gain 7,000 (7,000) Ordinary income (sec. 1245 recapture) 1,500 Interest income 1,000 (1,000) Ordinary Income $32,000
Image of page 17
6. Explain the requirements for a special partnership allocation.
Image of page 18
19 George and Barbaraform an equal partnership.George contributes $15,000 cash and Barbara contributes land with a fair market value of $15,000 and an adjusted basis of $10,000. A year later, the partnership sells the land for $20,000. How much of the gain on the sale will Barbara report? a. $2,000 b. $3,000 c. $4,000 d. $5,000 e. $7,500
Image of page 19
20 Barbara contributes to partnership BASIS 10,000 Barbara contributes to partnership FMV 15,000 Barbara's partnership interest: 50% Partnership has carryover basis 10,000 Partnership sells land for 20,000 Total Gain $10,000 Gain since land was invested $5,000 Barbara reports income of: All of built-in Gain $5,000 One-half of gain since investment 2,500 Total Gain reported by Barbara $7,500
Image of page 20
7. Calculate a partner's basis in a partnership interest.
Image of page 21
22 Taxation of Partnership Income B. Partner's Basis. A partner's basis in his partnership interest begins with his basis in assets contributed to the partnership. The partner's basis is increased by the partner's share of the partnership liabilities. Basis is increased by the partner's share of income and decreased by the partner's share of loss. Basis limits the amount of losses deductible by the partner and can never be less than zero.
Image of page 22
Investment or Beginning Basis Change in share of debt (+ or -) Add: Ordinary Income Separate Income & gains Tax-free income Contributions of Capital Less: Ordinary Loss Separate Exp. & Losses Non-deductible Expenses Partner Withdrawals Ending Basis Partner Basis - Sec. 705, 722, 742
Image of page 23
24 BA Partnership- 1 Ben and Ann formed the BA Partnership as equal partners. Each partner contributed cash and property with a value of $100,000 for partnership operations. As a result of these contributions, Ben had a basis of $80,000 and Ann a basis of $60,000 in their partnership interests. At the end of their first year of operations, they had the results on slide 26:
Image of page 24
25 BA Partnership - 2
Image of page 25
Image of page 26

You've reached the end of your free preview.

Want to read all 82 pages?

  • Spring '08
  • Godfrey,H
  • Accounting, Taxation in the United States, partner

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture