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Given: Use ‘Admit Partner D to Partnership’ template section for this data. On January 1, Year 11, Partner A died.

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Given:
The Year 10 financial statements for a partnership, Fan Company A, have been provided on the “Year 10 Financial Statements” worksheet (see the “Partnership Income and 
Tax” attachment below). The Year 11 financial data is also provided on the “Year 11 Financial Data” worksheet (see the “Partnership Income and Tax” attachment below).
Use ‘Admit Partner D to Partnership’ template section for this data.
On January 1, Year 11, Partner A died. The partnership agreement stipulated that in the event of a partner’s death, the partner’s interest would be paid to the estate within 
90 days of the date of death. The balances in the partnership accounts were determined on January 1. The partnership has the authority by the partnership agreement to sell 
the deceased partner’s interest at a minimum of 100% of the capital account at the date of death. The remaining partners found an interested party, Partner D, who paid 
$350,000 for Partner A’s interest. The partnership agreement specifies that any bonus accruing from the sale of a deceased partner’s interest will be added to the remaining 
partners as of the date of death. Partner B will receive 5/8 of the bonus and Partner C will receive 3/8 of the bonus.
Use ‘REALIGNMENT OF PARTNERSHIP ALLOCATIONS’ template section for this data.
On October 1, Year 11, the partners agreed to add a new partner. Partner E will own a 20% share of the partnership. Partner E has some expertise that will benefit the 
partnership. Partner E is investing $50,000 and land worth a fair market value of $200,000. The partnership will assume the $60,000 mortgage remaining on the land. The ownership allocations will be 
realigned to allow this new owner a 20% interest.
On December 31, Year 11:
The partnership agreement states that all capital balances are paid a 10% interest allowance based on the balance on December 31, before any 
The partnership agreement stipulates that Partner B and Partner C each receive a salary allowance of $30,000. 
A review of the withdrawals by the partners taken during the year revealed the following amounts for each partner: 
 
The remaining net income (loss) is distributed according to the partner’s share of ownership. Income and loss distributions are the same percentage.
Task:
A.  Perform the calculations necessary to complete the following financial statements using the information provided in the given and the Excel templates provided.
1.  Income Statement for Year 11 (Use the “Year 11 Partnership Distribution” worksheet found in the “Partnership Income and Tax” attachment below.)  
2.  Partnership Distribution for Year 11 (Use the “Year 11 Partnership Distribution” worksheet found in the “Partnership Income and Tax” attachment below.)
302.2.2-01-06 (2006)
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SUBDOMAIN 302.2 – FEDERAL INCOME TAX
Competency 302.2.2: Tax Treatments for Partnerships, Estates, and Trusts – The student determines the tax treatment for partnerships, estates, and trusts.
Objectives:
302.2.2-01: Calculate ordinary income for a partnership.
302.3.2-02: Reconcile taxable income to book income.
302.2.2-03: Calculate the basis of a partner’s interest.
302.3.2-04: Calculate the impact of applying tax law to assets contributed to a partnership.
302.2.2-05: Calculate the impact of applying tax law to partnership liabilities.
302.3.2-06: Calculate the impact of applying tax law for various ways that ownership in a partnership changes.
 
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Detail the tax formula for calculating federal income tax liability for the individual.

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Detail the tax formula for calculating federal income tax liability for the individual. Be sure to include examples of the items included in the formula. Discuss deductions for the individual taxpayer and be certain to include the following topics:

  • Deductions for AGI
  • Deductions from AGI
  • Itemized vs. Standard deduction

Explain qualification of dependency as it relates to claiming dependent exemptions from taxable income.

 
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In a follow up post, discuss how the federal taxation system is driven by economic and/or social initiatives.

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In a follow up post, discuss how the federal taxation system is driven by economic and/or social initiatives. Provide examples and explanations of a social tax initiative, and an economic tax initiative, either historically or current, and whether or not you feel the results of the original initiative has been achieved.

 
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In July of 2009, Mr. Mann, a sole proprietor who performs excavating services, purchased and put to use for business a piece of heavy equipment

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In July of 2009, Mr. Mann, a sole proprietor who performs excavating services, purchased and put to use for business a piece of heavy equipment for $36,500. This piece of equipment was depreciated using the MACRS 150% DB method of depreciation over the useful period of 7 years. No salvage value was approximated and applied to the appreciable basis of this equipment. Freight and installation charges for this equipment totaled $1500. Mr. Mann sold this piece of equipment for $31,500 in June of 2011.

For this task, define capital asset and discuss the purpose of depreciation of assets, and why depreciation directly affects valuation of the asset at disposal. Based on the information provided, determine the amount of capital gain or loss Mr. Mann incurred through this transaction. Be certain to detail your calculations for depreciating the equipment, and how this impacts the capital gain or loss associated with the disposal of this capital asset. Explain how any gain on this asset will impact the tax obligation for Mr. Mann as the proprietor.

This is what I calculated, but my instructor wants me recalculate depreciation using the MACRS tables?

Capital Gain or Loss:

Purchase Price          $36,500

Freight & Instillation     $1,500

Total cost                    $38,00

Depreciation 2009      38,000 * 1/7 * 150% * ½ = $4,071.73

Depreciation 2010      38,000 – 4,071.73 = 33,928.57 * 1/7 * 150% = $7,270.41

Depreciation 2011      38,000 – 4,071.73 – 7,270.41 = 26,657.86 * 1/7 * 150% * ½ = $2,856.23

Total Depreciation      $14,198.07

Written Down Value = Total Cost of Asset – Total Depreciation

Written Down Value = 38,000 – 14.198.07 = $23,801.93

Capital Gain = 31,500 – 23,801.93 = $7,698.07

 
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