Schedule M-2
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Q: question 33
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All of the following regarding Schedule M-2 (Form 1065) are correct EXCEPT:
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- A well written partnership agreement should include each of the following except ________. A. how to settle disputes B. the name of the partnership C. division of responsibilities D. Partners individual tax rateWhich of the following items is NOT separately stated on a general partnership's Schedule K? a) MACRS cost recovery deductions taken by the general partnership on its business assets. b) Charitable contributions made by the general partnership. c) Amounts elected to be expensed under Section 179 by the general partnership. d) Interest income from a municipality bond held for investment by the general partnership. e) Long term capital gain from the sale of a capital asset held for investment by the general partnership.Required: As the accountant for the partnership, compute the amount to be paid to Mrs. Cero under the agreement and prepare the journal entry required to enter the check issued to her in payment of the deceased husband's interest in the partnership. According to the partnership agreement, the difference between the amount paid to Mrs. Cero and the book value of Cero's capital account is allocated to the remaining partners based on their ending capital balances.
- For partnerships, the qualified business income (QBI) items reported on Schedule K-1 should include the Section 199A business income, the W-2 wages of any qualified trade or business, and: Guaranteed payments made to the partners in lieu of salary. Recapture of investment credit. The unadjusted basis of qualified property. The adjusted basis of qualified property.Which of the following is an election or calculation made by the partner rather than the partnership? Calculation of a section 199A(qualified business income) deduction amount. Claiming a section 179 deduction related to property acquired by the partnership. Tax treatment (e.g., credit, amortization) of research and experimental costs. The partnership's accounting method (e.g.. cash, accrual).Which one of the following is an example of a special allocation of partnership income? Distributions from the partnership to the partner are shown on Schedule K-1 line 20. The Schedule K-1 reports each partner's share of the information they need to calculate the § 199A (qualified business income) deduction. The partnership agreement provides that a partner will report all charitable contributions rather than his 20% distributive share. The partnership's capital gains and losses are shown separately on Schedule K-1.
- When preparing Form 1065, U.S. Return of Partnership Income, what entries must be made in order for the partners to claim the qualified business income (QBI) deduction? The appropriate adjustments must be made on the partnership's balance sheet and reported correctly on page 5 of Form 1065. Each partner's Schedule K-1 (Form 1065) should report the amount of their QBI deduction in Part III, box 13, other deductions. The information each partner will need to calculate their share of the QBI deduction should be reported on their Schedule K-1 (Form 1065), box 20, other information, or an attached statement. The QBI deduction will reduce the amount of the partnership's ordinary business income and must be included in total deductions reported on page 1 of Form 1065.Which of the following IS an allowable deduction for partnerships? Select one:Superannuation contributions to partnersInterest paid to partners on their capital contributions to the partnershipCapital loss incurred by the partnership on the sale of a partnership assetSalary payments to the partnersInterest paid on a bona fide loan from a partner to the partnershipA partnership begins its first year of operations with the following capital balances: $ 110,000 80,000 110,000 Allegan, Capital Berrien, Capital Kent, Capital According to the articles of partnership, all profits will be assigned as follows: Allegan will be awarded an annual salary of $20,000 with $10,000 assigned to Kent. • The partners will be attributed interest equal to 10 percent of the capital balance as of the first day of the year. ● The remainder will be assigned on a 5:2:3 basis, respectively. • Each partner is allowed to withdraw up to $10,000 per year. The net loss for the first year of operations is $20,000, and net income for the subsequent year is $40,000. Each partner withdraws the maximum amount from the business each period. Required: Prepare schedules that compute the balances in each partner's capital account at the end of each of the first two years of partnership operations.
- no need to explain: The following transactions will affect the balance of the total partnership capital except a. retirement of a partner by paying an amount equal to his interest b. the partnership incurred net loss for the year c. admission by purchase with bonus d. permanent retirement by partners Upon dissolution, the partners may adjust the partnership assets and liabilities. The net effect of such restatement must be distributed to the partners based on their a. ending capital balances b. old profit and loss ratio c. new profit and loss ratio d. beginning capital balancesThe sum of the partners’ ending tax basis amounts equals the partners’ ending tax basis capital account balances. These amounts are shown on the partnership's Schedule K. Group of answer choices True False1. Which of the following statements concerning partnership is true? a. A partnership is a legal entity separate and distinct from the individual partners. b. Individual partners are jointly liable for the debts and obligation of a partnership. c. Income tax is levied on the individual partners’ shares of net income of a partnership and is reported in their personal tax returns. d. All of the above is true. 2. Under what circumstances can the closing of the income summary account result in a debit to one partners’ capital account and credits to the other partners’ capital accounts? a. The results of operations are divided in a profit and loss ratio and the partnership sustained a loss for the period. b. The results of operations are allocated in a profit and loss ratio and the partnership’s net income was very low. c. The results of operations are divided in the average capital ratio and one partner had a low capital balance.…