Question

Z is a 30% partner who works for the EZ partnership. This partnership records: Gross profit...

Z is a 30% partner who works for the EZ partnership. This partnership records:

Gross profit $300,000

Guaranteed salary to Z $30,000

Operating expenses $214,000

Z received the salary and withdrew an additional $12,000 during this year. Z's $27,000 at the beginning of the year. Determine Z's basis at year-end,

A. $31,800, B. $42,000, C, $43,800, D. $214,000

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Homework Answers

Answer #1

Calculation of profits :-

Gross profit - (guaranteed salary + operating expenses)

= $300000 - ($30000 + $214000)

= $300000 - ($244000)

= $56000

Profits attributable to Z is 30%

= $56000 × 30%

= $16800.

Profit attributable to Z is = $16800.

Z's basis at year end =

= opening basis of year + profits attributable in year

= $27000 + $16800

= $43800

The Z's basis at year end = $43800

By above calculations we can say the answer is option C.

These are the calculations required to solve the above given question.

I hope, all the above provided calculations and information are useful and helpful to you.

if there is any clarification required regarding the above provided answer, please mention the main comment box.

Thank you.

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