ACC 455 Week 5 Learning Team Problem Set

May 8th, 2015
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ACC 455 Week 5 Learning Team Problem Set

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Chapter 9, Problem C:9-32; Partnership Income and Basis Adjustments (ems)Mark and Pamela are equal partners in MP Partnership. The partnership, Mark, and Pamela arecalendar year taxpayers. The partnership incurred the following items in the current year:SalesCost of goods soldDividends on corporpate investmentsTax-exempt interest incomeSection 1245 gain (recapture) on equip saleSection 1231 gain on equipment saleLong-term capital gain on stock saleLong-term capital loss on stock saleShort-term capital loss on stock saleDepreciation (no Sec. 179 or bonus dep. Components)Guaranteed payment to PamelaMeals and entertainment expensesInterest expense on loans allocable to:Business debtStock investmentsTax-exempt bondsPrincipal payment on business loanCharitable contributionsDistributions to partners ($40,000 each)$ 450,000210,00015,0004,00033,00018,00012,00010,0009,00027,00030,00011,60042,0009,2002,80014,0005,00080,000a) Compute the parnership's ordinary income and separately stated items.Partnership Ordinary Income ItemsSalesLess: Cost of goods soldGross ProfitAdd: Sec 1245 gain (recapture) on equip saleLess: Depreciation (no Sec. 179 or bonus dep comp)27,000Guaranteed payment30,000Business interest (debt)42,000Meals and entertainment ($11,600 x 50%)5,800$ 450,000(210,000)$ 240,00033,000(104,800)$ 168,200Partnership ordinary incomeSeparately Stated ItemsDividend incomeTax-exempt interest incomeSec. 1231 gainNet

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