Question

J owns an 80% interest in the capital and profits of the JL partnership. On April...

J owns an 80% interest in the capital and profits of the JL partnership. On April 1, 20x1, J bought from the partnership a warehouse that had been used in the business at its FMV of $60,000. The partnership's adjusted basis was $85,000. For the year ended Dec 31, 20x1, JL's net income was $105,000 after the $25,000 loss on the sale of the warehouse. What is J's share of the partnership's ordinary income for 20x1? A. $64,000 B. $84,000 C. $96,000 D. $104,000

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Answer : D. $104,000.

Explanation:

Since J owns 80% interest in the capital and profits of the JL partnership, he is a controlling partner . Thus any losses arising from a transaction of sale of property between controlling partner & controlled partnership firm are disallowed for computing controlling partner's ordinary income from the that partnership.

J's share of the partnership's ordinary income for 20x1

= (JL's net income + loss on the sale of the warehouse) * J's interest in JL partnership

= ($105,000 + $25,000) * 80 % = $104,000

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Gerard has a 60% interest in the capital and profits of Sly Partnership. He also owns...
Gerard has a 60% interest in the capital and profits of Sly Partnership. He also owns a 65% interest in the capital and profits of Brice Partnership. On February 5, 2014, Sly Partnership sold land to Brice Partnership for $35,000. At the time of the sale, the land had an adjusted basis to Sly Partnership of $40,000. What is the amount of loss that Sly Partnership can recognize in 2014?
1. ________ Wally owns a 53% interest in the Hunter Partnership. He sells land to the...
1. ________ Wally owns a 53% interest in the Hunter Partnership. He sells land to the partnership for $150,000. The land is worth $150,000 and has a basis to Wally of $160,000. One year later, Hunter Partnership sells the land to a third party for $152,000. One of the results of these transactions is that: a. Hunter Partnership has a recognized gain of $2,000. b. Hunter Partnership has a recognized loss of $8,000. c. Wally has a recognized loss of...
On December 31, 20X1, John owns a 50% partnership interest in which he has a $300,000...
On December 31, 20X1, John owns a 50% partnership interest in which he has a $300,000 tax basis and no amount at risk. The calendar year partnership has one activity. In earlier years, John deducted ordinary losses of $25,000 from the partnership for which he was fully at risk. During 20X2, John receives a $50,000 distribution from the partnership and is allocated a tax loss of $100,000. How much should be reported as income in 20X2? ____________________ How much should...
2 . Identify which of the following statements is true: If an S Corporation has no...
2 . Identify which of the following statements is true: If an S Corporation has no accumulated earnings and profits, the amount distributed to a shareholder will not increase the shareholder's basis in the stock        If a C Corporation does not distribute its income to its shareholders, double taxation of the income will occur.        C Corporation operating losses are deductible by the individual shareholders        S Corporation operating losses are never deductible by the individual...
14. Jim, single, took out a mortgage on his home for $590,000 five years ago. In...
14. Jim, single, took out a mortgage on his home for $590,000 five years ago. In September of this year, when the home had a fair market value of $620,000 and he owed $550,000 on the mortgage, he took out a home equity loan for $80,000. Will used the funds to purchase a yacht to be used for recreational purposes. What is the maximum amount of debt on which he can deduct home equity interest? a. $70,000. b. $80,000. c....
Revision Questions 1.     Non-Current Assets Provide the journal entries for the following transaction: Matthew built a...
Revision Questions 1.     Non-Current Assets Provide the journal entries for the following transaction: Matthew built a new building to store supplies for his business. The builder charged $250,000, the electrician cost $10,000 and a painter cost 5,000. A compulsory fire safety inspection was conducted and cost $1,000. Matthew is still worried about the building burning down and has purchased 12 months insurance for $10,000 which covers the value of the building in case of destruction. Matthew calculated that the above...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT