Question

Roberto and Reagan are both 25 percent owner/managers for Bright Light Enterprises. Roberto runs the retail store in Sacramento, CA, and Reagan runs the retail store in San Francisco, CA. Bright Light generated a $128,500 profit companywide made up of a $76,000 profit from the Sacramento store, a ($27,500) loss from the San Francisco store, and a combined $80,000 profit from the remaining stores. If Bright Light is taxed as a partnership and decides that Roberto and Reagan will be allocated 70 percent of his own store's profit with the remaining profits allocated pro rata among all the owners, how much income will be allocated to Reagan?

Answer 1

REAGAN'S INCOME WILL BE AS FOLLOW
A	His Share in loss from San Francisco Store			70%of ($27500)	($19,250)
B	His Share in remaining income of Bright Light Enterprises			25% of $94550	$                    23,638
	(TOTAL REMAINING AS CALCULATED BELOW)
	Total Income of Reagan			=(A+B)	$4,388
	CALCULATION OF REMAINING INCOME OF BRIGHT LIGHT ENTERPRISES
	30% OF SAN FRANCISCO, CA				$                    (8,250)
	30% FOF SACRAMENTO STORE				$                    22,800
	COMBINED PROFIT FROM REMAINING STORE				$                    80,000
	TOTAL				$                    94,550