BUS FPX 4065 Assessment 7 Problems

BUS FPX 4065 Assessment 7 Problems

Student Name

Capella University

BUS-FPX4065 Income Tax Concepts and Strategies

Prof. Name:

Date

Partnership Problems and Tax Implications

Problem 1

Darrel, Sissy, and Carol formed a partnership with specific contributions and ownership terms. Darrel contributed equipment, Sissy provided a building, and Carol agreed to perform all accounting and office-related work in exchange for a 10% partnership interest.

• Gain Recognition

  • Darrel’s equipment: No gain recognized.
  • Sissy’s building: No gain recognized.
  • Carol’s services: No gain recognized.

• Basis for Each Partner

  • Darrel: $100,000
  • Sissy: $50,000
  • Carol: $30,000

• Basis for Partnership Assets

  • Equipment: $100,000
  • Building: $50,000

Problem 2

Wayne had an initial basis of $46,000 in his partnership. His share of income and expenses for the year included ordinary income, guaranteed payments, long-term capital gain, §1231 gain, charitable contributions, §179 expenses, and cash distributions.

• Wayne’s Self-Employment Income: $74,000
• Wayne’s Basis at Year-End: $136,600

Problem 3

Karen had a partnership basis of $24,000 and received a $12,000 cash distribution along with equipment valued at $16,000 (FMV $24,000).

• Gain or Loss on Distribution: None recognized.
• Karen’s Ending Partnership Basis: $0
• Karen’s Basis in the Equipment: $12,000

Problem 4

Carrie acquired a 40% partnership interest for $86,000 in February 2017. Over subsequent years, her share of partnership income amounted to $118,000. She sold her interest for $206,000 on December 18, 2019.

• Gain or Loss on Sale: $2,000

BUS FPX 4065 Assessment 7 Problems

Problem 5

Stock basis was determined for various scenarios where the 80% rule was satisfied:

Problem 6

Taxable income for a C corporation was calculated based on book income and adjustments:

Problem 7

Taxable dividends, nontaxable distributions, and capital gains were determined for different types of distributions:

BUS FPX 4065 Assessment 7 Problems

References

American Psychological Association. (2020). Publication manual of the American Psychological Association (7th ed.). Washington, DC: Author.