The Cat Partnership Earned Ordinary Income Of

Question

The CAT Partnership earned ordinary income of $210,000 in 2014. The partnership has three equal​ partners, Carl​, Allen​, and Tom. Tom​, who is​ single, uses the standard​ deduction, and has other inc…

The CAT Partnership earned ordinary income of $210,000 in 2014.
The partnership has three equal​ partners, Carl​, Allen​, and Tom.
Tom​, who is​ single, uses the standard​ deduction, and has other
income of $13,000 ​(not connected with the​ partnership) in 2014.
He receives a $35,000 distribution from the partnership during the
year. What is Tom's taxable income in 2014​?

Adjusted gross income (AGI)

Minus:

Deductions from AGI:

Tom's taxable income

Solutions

Expert Solution

Solution:

Tom's taxable income 2014

Income from
partnership                 
=$35,000

Other
income                                      
=$13,000

Ordinary income($210,000 * 1/3)    =$70,000

Adjusted Gross
income                    
=$ 118,000

Minus: Deduction from AGI

standard deduction

6200 for 2014        
$6,200

personal income  
$4050                 
=($2,150)

Tom's taxable
income                       
=$ 115,850


Submit Your Answer

[contact-form-7 id=”5″ html_class=”cf7_custom_style_1″ title=”Answer Question”]