Question
Calculating Partnership Ordinary Income/Loss and Partner Taxable Income Partner Q is a partner in Partnership QRST. The partnership agreement states that Qs share of income
Calculating Partnership Ordinary Income/Loss and Partner Taxable Income
Partner Q is a partner in Partnership QRST. The partnership agreement states that Qs 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 partnerships financial records for the current year show:
Gross prot . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $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. Qs capital account in the partnership was $50,000 at the beginning of the year.
Using Form 1065, page 1 as a guide; calculate QRSTs ordinary income for the tax year.
Calculate Qs taxable income for the tax year of 2012. T will not be able to itemize deductions.
Calculate Qs capital account in the partnership at the end of the tax year.
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