Question

3. PR.02-26 a. $ Alfredo owns a one-third interest in Bayou Partnership. During the current year, Bayou's taxable income is $45,000. 4. PR.02-28 $ 5. PR.02-33 Janet owns a pest-control service. She charges customers $50 per month for basic pest control. Alternatively, customers can pay a lump sum of $500 for one year of basic monthly pest control. During the current year, Janet receives $13,000 in monthly payments and $26,000 in 1-year prepayments. 6. PR.02-38 7. PR.02-40.ALGO $ Monte owns 1,000 shares of Ali, Inc., common stock. During the current year, Ali declares and distributes a 20% stock dividend. As a result, Monte receives an additional 200 shares of stock. 8. PR.02-41 9. PR.02-43 Rogers Trucking Company owes Big Truck Sales, Inc., $200,000 for the purchase of 3 trucks. Rogers is having a bad year and is unable to make full payment on the debt to Big Truck. Rather than foreclose on Rogers, Big Truck reduces the debt to $170,000 so that Rogers can stay in 10. PR.02-44 business.

Answer 1

Q. AIFoedo alPes $15000 C$45000x2) of gncome Foom the partneoshep: oconers of Condee8t entiHOs aoe taxad n Theio shaoe t entsty's incone. Becacuse -the partneasnsp has a08zed încome, the paotneos havee also ocalized ncome. b. Janet has vcalized focome of $13000 Foom the monttly ocaeprs degaodles of heo methodof accounting becoase she hasa clam of oight to the fncome Apply Ang the ahereOith al -to-pay Cocept, Janetwoced alD Pncleede the $26000 OF poopaymemb An income even t she Ps an accoual bass taxpayeo. Noles f Janet is an accouel bass taxpayeo, She Could use the aCccocad method to COccont foo the pepayments onder the defleroal othod Theg exceptfon Ps doceessed in chapteo 3. C. Monte has not reallzed any ncome Foom the stock divided becelase his cwcalth has nde Pncocased. Thal Ps, his peacentage Oceneoship fn the Fiom omapns the same, as does thovalele OF The fom. The oefore, h?s total cocalth oenans onchanged and hPs poopeoty nteost Pn the Coopooatfon has not Changed. đ. Rogeos cocacth has Incoeased by$3g000 C $200,000-$70.000) as a roelt of a toansoclfoo coth a Second paroty.Theoefooe, f has eezed Pncome of $30000 Foom the dechaoe fdebt. Rogeos has obtained a clelm of oight to the $30000 bocacue 9E Ps no longeo crder an obligalfon to opay the $30000 II fosolent befoe tre deschaoge or F the debt B TCoaled to cae poopeoty, part oo aee f tre Foogreness Creed be cxeleeded Fom Pncome.