Partnership JSE Associates has
Partnership JSE Associates has three general partners, Spencer,Jean and Elise, who share profits equally. During the year, Spencerand Elise each received $200 in guaranteed payments for services.Jean received $400 in guaranteed payments for services. In additionto guaranteed payments, the partnership’s had gross receipts of$2,400, operating expenses of $1,000. Interest income was $60 andSection 179 expense was $150. Please answer the following: Show thecalculation of the amount of the partnership’s ordinary income,Page 1, Line 22 and Schedule K, Line 1 of the Form 1065:
Show the amount listed on the following lines of Spencer’sK-1.
Line 1:
Line 4:
Line 5:
Line 12:
Show the amount listed on each of the following lines of Jean’sK-1.
Line 1:
Line 4:
Line 5:
Line 12:
Show the calculation of the amount of income on which Jean willpay self-employment tax:
Answer:
| calculation of the amount of the partnership’s ordinaryincome | |
| gross receipts | 2400 |
| less -operating expenses | (1000) |
| less- payments for services (200+200+400) | (800) |
| Add- Interest income | 60 |
| 660 | |
| less – section 179 expenses | (150) |
| income | 510 |
| this income share three partnerr in equally ratio 510/3 | 170 |
Section 179 of the United States InternalRevenue Code (26 U.S.C. § 179), allows a taxpayerto elect to deduct the cost of certain types ofproperty on their income taxes as an expense,rather than requiring the cost of the property to be capitalizedand depreciated.
| amount listed on the following lines of Spencer’sK-1. | ||
| Line 1 | Share of income | 170 |
| Line 4 | guaranteed payments for services. | 200 |
| Line 5 | Interest income 60/3 | 20 |
| Line 12 | section 179 deduction 150/3 | 50 |
| Total | 440 |
| amount listed on the following lines of Jean’sK-1. | ||
| Line 1 | Share of income | 170 |
| Line 4 | guaranteed payments for services. | 400 |
| Line 5 | Interest income 60/3 | 20 |
| Line 12 | section 179 deduction 150/3 | 50 |
| Total | 640 |
the amount of income on which Jean will pay self-employment tax:when Jeans pay taxes he take dedection on section 179 so we deduct$50 in his income so here his taxable income will be170+400+20-50=540
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