Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Emily Lenk, George Arenes, and Owen Geertz carry on a consulting service business through a partnership. They have all been active in the business. Based

Emily Lenk, George Arenes, and Owen Geertz carry on a consulting service business through a partnership. They have all been active in the business. Based on their partnership agreement, Emily, George, and Owen each share 30%, 30%, and 40% of the partnerships profits and losses respectively. In the current year, they each receive a salary of $40,000 from the partnership. The following is the income statement of their partnership for its taxation year 2022. Emily & Owen Partnership Income Statement For the Year Ended December 31, 2022 Income: Consulting service fees $380,000 Gain on sale of public company shares 32,000 Eligible dividends 15,000 Capital dividends 13,000 Interest income 5,000 445,000 Expenses: Office rent 18,000 Capital cost allowance 11,000 Salaries paid to staff 45,000 Salaries paid to partners 120,000 Donations to registered charities 3,000 Loss on sale of land 12,000 209,000 Net income $236,000

Required: A. Compute the net income for tax purposes for the partnership for 2022.

B. How much business income is allocated to Owen from the partnership in 2022?

C. Based on the information given, compute Owens taxable income for 2022.

D. On December 31, 2022, Owen is considering selling his partnership interest for $390,000. The ACB of his partnership interest at the beginning of the year had a balance of $75,000. Calculate any gain or loss for tax purposes on the sale. Show all calculations.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Laboratory Auditing For Quality And Regulatory Compliance

Authors: Donald C. Singer, Raluca-Ioana Stefan, Jacobus F. Van Staden

1st Edition

0367392461, 978-0367392468

More Books

Students also viewed these Accounting questions

Question

Identify and control your anxieties

Answered: 1 week ago

Question

Understanding and Addressing Anxiety

Answered: 1 week ago