Question

Partner Q is a partner in Partnership QRST. The partnership agreement states that Q’s share of income and losses is 30 percent. Q provides services to QRST. Both QRST and Q use a calendar year for tax purposes. The partnership’s financial records for the current year show:

Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                  $260,000

Guaranteed payments to Q. . . . . . . . . . . . . . . . . .                 (20,000)

Life insurance premium for Q . . . . . . . . . . . . . . . . .            (500)

Operating expenses . . . . . . . . . . . . . . . . . . . . . . .                  (60,000)

Charitable contributions. . . . . . . . . . . . . . . . . . . . .               (9,000)

Net long-term capital gain. . . . . . . . . . . . . . . . . . .                10,000

Q is single, has no other income, and no itemized deductions for the year. Q

received the $20,000 guaranteed payments and withdrew an additional $10,000

during the year. Q’s capital account in the partnership was $50,000 at the beginning of the year.

1. Using Form 1065, page 1 as a guide; calculate QRST’s ordinary income for the tax year.

2. Calculate T’s taxable income for the tax year of 2012. T will not be able to itemize deductions.

3. Calculate T’s capital account in the partnership at the end of the tax year.  

Answer 1

originary frcome of the Calellion of the Abu tip GAST | Parkealar $ Amauat Scocon accoo Fans to a Lese: cfcatto Sucenta Semco &ණිය; fmcce to * Calculation of 'Q' taxable income. > Stage in the ordinary income QRST = 180000 X (20%) = 180000 X 003 $54000 Scanned with CamScanner

→ → - * → → → Add: share in the LTCG of QRST 10000 X 30% 10000 X 0.3 $ 3000 Add: Guaranteed payments from QRST = $ 20000 Less : Life insuance poémium = $500 Taxable income = $76500 Calculation of a capital accocent Q is basis $20 000 Lesso ducerings 10,000] Add; share in ordinary income $54000 > Addi share in long term capital z Partney ship Box's $67000 - * Scanned with CamScanner