Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 3 Grace and Frankie formed a partnership a few years ago to operate an Online Food Catering business.The partnership agreement includes the following clauses:

Question 3

Grace and Frankie formed a partnership a few years ago to operate an Online Food Catering business.The partnership agreement includes the following clauses:

  • Frankie to receive interest at the rate of 12% per annum on a loan of $30,000 that she made to the business.
  • Grace to be paid a salary of $50,000 per annum.
  • After payment of Grace's salary, partners share profits and losses equally.

After reviewing their tax files, you noted:

Year ended 30 June 2019 - The partnership incurred a tax loss of $12,000 in the year ended 30 June 2019.

Year ended 30 June 2020 -The partnership's accounting profits for the year ended 30 June 2020 is $100,000 after expensing Grace's salary and interest payable to Frankie.

Required:

Advise Grace and Frankie as to the net income of the partnership and the assessable income of each partner from the partnership for the year ended 30 June 2020.Justify your advice with reference to ITAA sections where appropriate.

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

Step: 3

blur-text-image

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

Criminal Law Cases And Materials

Authors: Joshua Dressler, Stephen Garvey

9th Edition

1647087708, 978-1647087708

More Books

Students also viewed these Law questions

Question

How to correct Sentence Errors?

Answered: 1 week ago

Question

The relevance of the information to the interpreter

Answered: 1 week ago