(SOLVED) On January 1 2014 Leo paid 15 000 for 5 percent

On January 1, 2014, Leo paid $15,000 for 5 percent of the stock in BLS, an S corporation. In
November, he loaned $8,000 to BLS in return for a promissory note. BLS generated a $600,000
operating loss in 2014. a. How much of his share of the loss can Leo […]

At the beginning of 2015, Ms. P purchased a 20 percent interest in PPY Partnership for
$20,000. Ms. P’s Schedule K-1 reported that her share of PPY’s debt at year-end was $12,000
and her share of ordinary loss was $28,000. On January 1, 2016, Ms. P sold her interest to […]

Zelda owns a 60 percent general interest in YZ Partnership. At the beginning of 2014, the
adjusted basis in her YZ interest was $95,000. For 2014, YZ generated a $210,000 business
loss, earned $14,600 dividend and interest income on its investments, and recognized a $6,200
capital gain. YZ made no […]

Bonnie and George are equal general partners in BG Partnership. Bonnie receives a $4,000
monthly guaranteed payment for services. This year, BG generated $95,000 profit (before
consideration of Bonnie’s guaranteed payments). a. Compute each partner’s distributive share
of ordinary business income. b. Compute each partner’s self-employment income. c. How
would […]

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AV Inc. is a member of an LLC. This year, AV received a Schedule K-1 reporting a $1,200
share of capital loss and a $4,000 share of Section 1231 gain. During the year, AV recognized a
$5,000 capital loss on the sale of marketable securities and a $17,000 Section 1231 […]

This year, individual X and individual Y formed XY Partnership. X contributed $50,000 cash, and
Y contributed business assets with a $50,000 FMV. Y’s adjusted basis in these assets was only
$10,000. The partnership agreement provides that income and loss will be divided equally
between the two partners. Partnership operations […]

Refer to the facts in the preceding problem. Mr. T is a 10 percent general partner in KLMN.
During the year, he received a $1,000 cash distribution from KLMN. a. Compute Mr. T’s share
of partnership ordinary income and separately stated items. b. If Mr. T’s adjusted basis in his […]

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