2, Nick, Chris, Stacey, and Mike are each 25% partners in Liberty Partnership, a

Question

2, Nick, Chris, Stacey, and Mike are each 25% partners in Liberty Partnership, a gen- eral partnership. During the current year, the partnership had revenues of $300,000 and nonseparately allocated business expenses of $100,000, including a guaranteed payment of $30,000 to Nick for services rendered. Also, during the current year, the partnership had interest income of $10,000 and charitable contributions of $16,000. With regard to activity in the partnership, what should Stacey report on her income tax return for the current year? Ordinary Income Interest Income Charitable Contributions b. C. d. $200,000 80,000 57,500 50,000 $10,000 2,500 2,500 2,500 $16,000 4,000 4,000 4,000 Duffy Associates is a partnership engaged in real estate development. Olinto, a civil engineer, billed Duffy $40,000 in the current year for consulting services rendered. In full settlement of this invoice, Olinto accepted $15,000 cash payment plus the following: 3. 10% partnership interest in Duffy Automobile Fair Market Value $10,000 7,000 Carrying Amount on Duffy's Books N/A $3,000 What amount should Olinto, a cash basis taxpayer, report in his current-year return as income for the services rendered to Duffy? a. $15,000 b. $28,000 c. $32,000 d. $40,000

Explanation / Answer

Answer of 2nd Question is (a)

Ordinary Income : $200000

Interest Income : $10000

Chariatable Contribution : $16000

. As Ordinary Activity oartnership firm had revenvue of $300000 out of which they had incurred expenses of $100000 including of $ 30000 paid to Nick for Service rendered.

Other Interest income and Charitable COntribution should be shown Separately.

Answer of 3rd Question is (c).

Cash Receipt : $ 15000 + Fair Market Value of Automobile $ 7000+ Fair Market Value of Share in Duffy Books : 10000 = Total $ 32000

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