Description Problem 2 (10 points, recommended time 20 minutes) a. On 12/31/X4, Zoom, LLC, reported ...
Description Problem 2 (10 points, recommended time 20 minutes) a. On 12/31/X4, Zoom, LLC, reported a $60,000 loss on its books. The items included in the loss computation were $30,000 in sales revenue, $15,000 in qualified dividends, $22,000 in cost of goods sold, $50,000 in charitable contributions, $20,000 in employee wages, and $13,000 of rent expense. How much ordinary business income (loss) will Zoom report on its X4 return? Answer Here: b. Klaus is a 30 percent partner in the Red Partnership. On January 1, Red distributes $15,000 cash and inventory with a fair value of $20,000 (inside basis of $10,000) to Klaus in complete liquidation of his interest. Red has no liabilities at the date of the distribution. Klaus's basis in his Red Partnership interest is $27,000. What is the amount and character of Klaus's gain or loss on the distribution? Answer Here: c. Kris and Harry are equal partners in the HK Partnership. The partners formed the partnership five years ago by contributing cash. Prior to any distributions Harry has a basis in his partnership interest of $45,500. On December 31, HK makes a proportionate operating distribution of $48,500 cash to Harry. What is the amount and character of Harry's recognized gain or loss and what is his remaining basis in HK? Answer Here: d. Julio is a 30 percent partner in the JD Partnership. On January 1, JD distributes $26,000 cash to Julio in complete liquidation of his interest. JD has only capital assets and no liabilities at the date of the distribution. Julio's basis in his JD Partnership interest is $37,000. What is the amount and character of Julio's gain or loss on the distribution? Answer Here: e Marc is a 25 percent partner in the Beta Partnership. On January 1, Beta distributes $20,000 cash and land with a $16,000 fair value (inside basis $8,000) to Marc. Beta has no liabilities at the date of the distribution. Marc's basis in his Beta Partnership interest is $16,000. What is the amount and character of Marc's gain or loss on the distribution and Marc's basis in the land, respectively? Answer Here:
