Question

Acey and Deucy formed the Axcey-Deucy Partnership on January 1, 2017, with cash investments of $120,000 and $80,000 for 60 percent and 40 percent respective interest in both the partnership's capital and income. The partnership operates a retail sales business, reports on the calendar year, and uses the accrual method. From the data below, compute the partnerships 2021 ordinary business income and list the items which will be separately reportable by the partners on their individual returns.

Answer 1

Sales	250,000
Sales returns and allowances	(4,800)
Net sales	$245,200
Less: Cost of goods sold	(110,000)
Gross margin	$135,200
Less: Expenses
Salaries	(50,000)
Rents	(12,000)
Interest	(6,000)
Real estate taxes	(2,500)
Depreciation: Building3,377Amortization of organization cost200Bad debt expense1,500Total$5,077	(5,077)
Net profit	$59,623
Code Sec. 1245 recapture	1,801
Partnership's ordinary income	$61,424

 

		Acey (60%	Deucy (40%)
Partnership's ordinary income	61,424	36,854	24,570
Separately reported income:
Foreign dividend income	750	450	300
Domestic dividend	1,000	600	400
Long term capital gain domestic stock	2,500	1,500	1,000
Short-term capital gain foreign stock	1,075	645	430
Sec. 179 write-off	20,000	12,000	8,000
Code Sec. 1231 gain	3,125	1,875	1,250
Foreign income tax withholding	225	135	90
Charitable contribution	400	240	160