A partnership is owned by a mother (60%) and her son (40%). Their capital accounts are maintained in the same ratio. The son received his ownership interest as a gift from his mother several years ago. Partnership income for the current year was $50,000. Although the mother performed services valued at $10,000, there was no entry on the partnership books and she received no cash for her services. To avoid a reallocation by the IRS, what amount should be allocated to the mother?
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- I think it is $40,000. 60% of $50,000 + $10,000
- Apr 04, 2018 at 7:33pm
- You need to deduct the 10,000 of the performed services of the mother from the partnership income.
- Apr 04, 2018 at 7:36pm
- compensation to the mother is an expense in the partnership
- Apr 04, 2018 at 7:38pm
- Apr 04, 2018 at 7:42pm