Question
The ABC Company generated for 2021 net income from operations of $250,000. The Company has two partners: Partner A with a 60% stake and Partner
The ABC Company generated for 2021 net income from operations of $250,000. The Company has two partners: Partner A with a 60% stake and Partner B with a 40% stake. Partner A is the managing partner and received a $25,000 guaranteed payout in 2021. Partner B is a limited partner and received a $20,000 guaranteed payout for the same period. Which of the following alternatives is true for taxable year 2021?
a.Partner B is subject to the payment of Federal Self-Employment Tax only for the amount of $120,000.
b. Partner B is subject to the payment of Federal Self-Employment Tax only for the amount of $20,000.
c. Partner A is subject to the payment of Federal Self-Employment Tax only for the amount of $150,000.
d. Partner A is subject to the payment of Federal Self-Employment Tax only for the amount of $25,000.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Intermediate Accounting
Authors: Donald E. Kieso, Jerry J. Weygandt, and Terry D. Warfield
15th edition
978-1118159644, 9781118562185, 1118159640, 1118147294, 978-1118147290
