Barry and Kurt are equal partners in the BK Partnership

52. Barry and Kurt are equal partners in the BK Partnership. Barry receives a guaranteed payment of $55,000. In addition to the guaranteed payment, Barry withdraws $10,000 from the partnership. The partnership has $24,000 in ordinary income during the year.

a. how mush income must Barry report from BK Partnership?
b. what is the effect on Barry’s partnership basis?


Click here for the solution: Barry and Kurt are equal partners in the BK Partnership

The Heron Partnership was formed on July 1 of the current year and admitted Carl and Megan as equal partners on that date

The Heron Partnership was formed on July 1 of the current year and admitted Carl and Megan as equal partners on that date. The partners each contributed $ 200,000 of cash to establish a children’s clothing store in a local shopping mall. The partners spent July and August buying inventory, equipment, supplies, and advertising for their "Grand Opening" on October 1. Following are some of the costs the partnership incurred during its first year of operations:

Legal fees to form partnership 2,000
Advertising for "Grand Opening" 15,000
Advertising after opening 10,000
Consulting fees for establishing accounting system 5,000
Rent, six months at $ 2,000/ month 12,000
Utilities at $ 600 per month 3 3,600
Salaries to sales clerks 30,000
Payments to Carl and Megan for services ($ 5,000/ month each for three months, beginning in October) 30,000
Tax return preparation expense 5,000

In addition, the partnership purchased all of the assets of Granny Newcombs, Inc. Of the total purchase price for these assets, $ 60,000 was allocated to the trade name and logo.

Determine how each of the above costs is treated by the partnership, and identify the period over which the costs can be deducted, if any.

Click here for the solution: The Heron Partnership was formed on July 1 of the current year and admitted Carl and Megan as equal partners on that date

Use the assets and partners’ bases from Problem 28. Assume the partnership distributes all its assets in a liquidating distribution

Use the assets and partners’ bases from Problem 28. Assume the partnership distributes all its assets in a liquidating distribution. In deciding the allocation of assets, what issues should the partnership consider to minimize each partner’s taxable gains?

Click here for the solution: Use the assets and partners’ bases from Problem 28. Assume the partnership distributes all its assets in a liquidating distribution