Partner\'s Distributive Shares: On January of the current year, Becky (20%), Chu
ID: 2425172 • Letter: P
Question
Partner's Distributive Shares: On January of the current year, Becky (20%), Chuck (30%), and Dawn (50%) are partners in the BCD Partnership. During the current year, BCD reports the following results. All items occur evenly throughout the year unless otherwise indicated. Assume the current year is not a leap year.
Ordinaty income: 120,000. Long Term Capital Gain (recognized September 1): 18,000. Short Term Capital Loss (recognized March 2): 6,000. Charitable Contribution (made October 1st): 20,000
A) What are the distributive shares for each partner, assuming they all continue to hold their interests at the end of the year?
B) Assume Becky purchases a 5% partnership interest from Chuck on July 1st so that Beck and Chuck each own 25% from that date throughout the end of the year. What are Becky and Chuck's distributive shares for the current year?
Explanation / Answer
A) IF THEY CONTINUE TO HOLD THEIR INTEREST Amount($) BECKY (20%) CHUCK (30%) DAWN (50%) ORDINARY INCOME 120,000 24,000 36,000 60,000 LTCG 18,000 3,600 5,400 9,000 STCL (6,000) (1,200) (1,800) (3,000) CHARITABLE CONTRIBUTION (20,000) (4,000) (6,000) (10,000) SHARE OF EACH PARTNER($) 112,000 22,400 33,600 56,000 B) IF THE PARTNERTSHIP CHANGE DURINGTHE YEAR SHARE OF EACH PARTNER BEFORE CHANGE IN RATIO I.E UPTO 30TH JUNE Amount($) BECKY (20%) CHUCK (30%) DAWN (50%) ORDINARY INCOME FOR 91 DAYS 29,589 5,918 8,877 14,795 SHARE OF EACH PARTNER($) (1) 29,589 5,918 8,877 14,795 SHARE OF EACH PARTNER AFTER CHANGE IN RATIO Amount($) BECKY (25%) CHUCK (25%) DAWN(50%) ORDINARY INCOME 90,411 22,603 22,603 45,205 LTCG 18,000 4,500 4,500 9,000 STCL (6,000) (1,500) (1,500) (3,000) CHARITABLE CONTRIBUTION (20,000) (5,000) (5,000) (10,000) SHARE OF EACH PARTNER($) (2) 82,411 20,603 20,603 41,205 TOTAL SHARE(1+2) 112,000 26,521 29,479 56,000