Jill and Tilly Masterson share the same last name, but are not related. They met each...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Jill and Tilly Masterson share the same last name, but are not related. They met each other a number of years previously when they attended the Canadian Memorial Chiropractic College in Toronto. Last year, they discovered that both had moved to Edmonton and, over coffee, they learned that neither was happy in the practice where they work. They decided to create a partnership and go out on their own. Masterson Chiropractic Services started business at the beginning of the current year. Jill contributed most of the capital for the new partnership, so it was determined that she will receive 75 per cent of any capital gains or dividends received by the partnership. The partnership agreement was set up at the beginning of 20XX and calls for business income to be shared equally. Because local interests are important to both of them, the partnership makes some charitable contributions, which are also shared equally per the agreement. For the year ending December 31, 20XX, their results, prepared on a GAAP basis, are as follows: Masterson Chiropractic Services Partnership Income Statement Year Ending December 31, 20XX Revenues $1,000,000 Expenses: Office rent S 84,000 Office supplies 15,000 Amortization 32,000 Business meals and entertainment 18,000 Charitable donations 28,000 Staff salaries 70,000 Salary to Jill 175,000 Salary to Tilly 175,000 597,000 Net Business Income $403,000 Other income: Capital gains S 15,000 Eligible Dividends Received 25,000 40,000 Accounting net income $443,000 Other Information 1. Jill and Tilly have decided to use the ITA 34-election to report Taxable Income on a billed basis. Included in the revenue reported for accounting purposes is $76,000. This is the first year of operation; therefore, there was no unbilled WIP balance on January 1. 2. Jill and Tilly wish to deduct maximum CCA for the year, which has been calculated at $43,000. Required A. Calculate the amount of income from the partnership that would be included in the Net Income for Tax Purposes for Jill and Tilly. ( 24 marks) B. Indicate the amount of any federal tax credits that would be available to Jill and Tilly as a result of their interest in the partnership. ( 6 marks) Jill and Tilly Masterson share the same last name, but are not related. They met each other a number of years previously when they attended the Canadian Memorial Chiropractic College in Toronto. Last year, they discovered that both had moved to Edmonton and, over coffee, they learned that neither was happy in the practice where they work. They decided to create a partnership and go out on their own. Masterson Chiropractic Services started business at the beginning of the current year. Jill contributed most of the capital for the new partnership, so it was determined that she will receive 75 per cent of any capital gains or dividends received by the partnership. The partnership agreement was set up at the beginning of 20XX and calls for business income to be shared equally. Because local interests are important to both of them, the partnership makes some charitable contributions, which are also shared equally per the agreement. For the year ending December 31, 20XX, their results, prepared on a GAAP basis, are as follows: Masterson Chiropractic Services Partnership Income Statement Year Ending December 31, 20XX Revenues $1,000,000 Expenses: Office rent S 84,000 Office supplies 15,000 Amortization 32,000 Business meals and entertainment 18,000 Charitable donations 28,000 Staff salaries 70,000 Salary to Jill 175,000 Salary to Tilly 175,000 597,000 Net Business Income $403,000 Other income: Capital gains S 15,000 Eligible Dividends Received 25,000 40,000 Accounting net income $443,000 Other Information 1. Jill and Tilly have decided to use the ITA 34-election to report Taxable Income on a billed basis. Included in the revenue reported for accounting purposes is $76,000. This is the first year of operation; therefore, there was no unbilled WIP balance on January 1. 2. Jill and Tilly wish to deduct maximum CCA for the year, which has been calculated at $43,000. Required A. Calculate the amount of income from the partnership that would be included in the Net Income for Tax Purposes for Jill and Tilly. ( 24 marks) B. Indicate the amount of any federal tax credits that would be available to Jill and Tilly as a result of their interest in the partnership. ( 6 marks)
Expert Answer:
Answer rating: 100% (QA)
Income tax is a tax levied on the income of individuals corporations trusts and other legal entities Income could be from different sources it might b... View the full answer
Related Book For
South Western Federal Taxation 2015 Essentials of Taxation Individuals and Business Entities
ISBN: 9781285438290
18th edition
Authors: James Smith, William Raabe, David Maloney, James Young
Posted Date:
Students also viewed these accounting questions
-
A number of years ago, Kay acquired an interest in a partnership in which she is not a material participant. Kays basis in her partnership interest at the beginning of 2013 is $40,000. Kays share of...
-
A number of years ago, Kay acquired an interest in a partnership in which she is not a material participant. Kay's basis in her partnership interest at the beginning of 2015 is $40,000. Kay's share...
-
A number of years ago, Kay acquired an interest in a partnership in which she is not a material participant. Kay's basis in her partnership interest at the beginning of 2014 is $40,000. Kay's share...
-
A square garden has an area of 900 square feet. If a sprinkler (with a circular pattern) is placed in the center of the garden, what is the minimum radius of spray the sprinkler would need in order...
-
Sherwin-Williams is a major paint manufacturer. Recently, the research and development (R&D) department came out with a new paint product designed to be used in areas that are particularly prone to...
-
Write as a single logarithm. a. log 2 5 + log 2 3 b. log 3 12 log 3 2 c. 3 log 5 2 + log 5 8 d. 2 log 7 4 3log 7 2 e. log 3 25 + log 3 4 f. 2 log 7 (1/4) + log 7 9 g. 1 + log 4 3 h. lg 5 2 i. 3 ...
-
Using divisibility rules, determine if 87,762 is divisible by 10 .
-
Telly Savalas owns the Bonita Barber Shop. He employs four barbers and pays each a base rate of $1,000 per month. One of the barbers serves as the manager and receives an extra $500 per month. In...
-
Current Attempt in Progress Whispering Winds Company uses flexible budgets to control its selling expenses. Monthly sales are expected to range from $190,400 to $224,000. Variable costs and their...
-
W hat features of the format operator (%) do you need, at minimum, to print a table that lines up floating-point numbers in a nice column? What features of the format method do you need, at minimum,...
-
Benny is a 40 year old mechanic. He earns $85,000, is divorced and lives at home with his mother in the house she owns. Benny inherited about $300,000 when his father died which he has been keeping...
-
Ted and his family - Ted (38), Liz (38), Ted Jr. (11), and Miriam (8) - are covered under the UniCare State Indemnity Plan (Basic with CIC). In 2022, Ted and his family had the following events: 1....
-
Discuss the role of the Translation Lookaside Buffer (TLB) in virtual memory systems. How does TLB caching improve address translation, and what impact do TLB misses have on system performance?
-
Sam buys a hollow, plastic rock where he plans to hide his spare key. He puts it near several other rocks by the door and calls to his two children, a 3 - year - old and a 6 ( 1 ) / ( 2 ) - year -...
-
Morganton Company makes one product and it provided the following information to help prepare the master budget: a. The budgeted selling price per unit is $65. Budgeted unit sales for June, July,...
-
Can you explain how additional information works? Problem 1-6 (IAA) Intercon Company is planning to refinance certain short-term obligations on a long term basis. The 2020 financial statements are...
-
1. Following are information about Alhadaf Co. Cost incurred Inventory Purchases Sales Adverting expense Salary Expense Depreciation Beginning Inventory Ending Inventory Amount 118,000 350.000 90,000...
-
Once its new facilities are finished, the Church of the Good Samaritan moves from downtown Madison City to the suburbs. Instead of disposing of the old location, the church leases it to a former...
-
Mini, in Problem 16, reports $800,000 of pretax book net income in 2015. Mini did not deduct any bad debt expense for book purposes but did deduct $15,000 in bad debt expense for tax purposes. Mini...
-
Swift Corporation distributes land (basis of $55,000 and fair market value of $120,000) to Sam and cash ($240,000) to Allison in exchange for part of their stock. Other shareholders do not redeem any...
-
What would you think about a company whose stock was selling for \($50\) a share in January and \($12\) a share in December?
-
Because a publicly traded company receives money only when its stock is originally issued, why do you think it would care about the stocks market value in the stock market? Assume you own stock in a...
-
When you consider that companies are generally in business to earn a profit, why might it be acceptable to select a capital project that promises a return that is just equal to the weighted average...
Study smarter with the SolutionInn App