Adam, Barbara and Charlotte formed the equal ABC partnership; Adam and Barbara each contributed cash


Question Description:

25

Adam, Barbara and Charlotte formed the equal ABC partnership; Adam and Barbara each contributed cash 1 answer below » Adam, Barbara and Charlotte formed the equal ABC partnership; Adam and Barbara each contributed cash of $100,000 and Charlotte contributed land worth $130,000 with a basis of $120,000 and subject to a mortgage of $30,000. In the first year, (using cash basis for tax purposes) they had the following for tax purposes: Sales- $400,000 Purchase of inventory- $180,000 Ending inventory- 40,000 Depreciation- 30,000 Section 179 Expense- 25,000 Salaries- 40,000 Guaranteed payment to Adam- 15,000 Purchase of Equipment- 150,000 Rent Expense- 20,000 Interest Income- 5,000 Mortgage Interest Expense- 1,500 View complete question » Adam, Barbara and Charlotte formed the equal ABC partnership; Adam and Barbara each contributed cash of $100,000 and Charlotte contributed land worth $130,000 with a basis of $120,000 and subject to a mortgage of $30,000. In the first year, (using cash basis for tax purposes) they had the following for tax purposes: Sales- $400,000 Purchase of inventory- $180,000 Ending inventory- 40,000 Depreciation- 30,000 Section 179 Expense- 25,000 Salaries- 40,000 Guaranteed payment to Adam- 15,000 Purchase of Equipment- 150,000 Rent Expense- 20,000 Interest Income- 5,000 Mortgage Interest Expense- 1,500 Dividends- 1,000 Ending Accounts Rec- 35,000 Depreciation for book purposes was $20,000, and they had a bad debt accrued expense of $4,000 for book purposes, but not actual charge off’s during the year. A- What is ABC’s company’s ordinary business income? B- What are it’s separately stated items? (those that go on Schedule K?) C- Compute total tax net income, including separately stated items, and reconcile it with book net income (The M01 reconciliation would be the reverse) D- What are it’s beginning and ending balance sheets for book purposes (as would go on Schedule L, Form 1065?) View less » Sep 05 2015 05:55 PM

Answer

25