Jack and Jill decided to pool their money and start a water delivery business. Since they trust each other so much, they did not draw up any legal documents for the business. During the first year of business, they earned $50,000 which was net of $10,000 paid to Jill as a guaranteed payment. During the second year of business, they decided to limit their liability exposure by forming an LLC.   Was a partnership formed during the first year?       If a partnership was formed, how much income will be taxed at the partnership level?           For the second year, do they need to file a partnership tax return?

Hi, I don't know how to prepare a predistribution plan for this partnership. Please help me. Take a look at the photo with my problem.  The partnership of Butler, Osman, and Ward was formed several years ago as a local tax preparation firm. Two partners have reached retirement age, and the partners have decided to terminate operations and liquidate the business. Liquidation expenses of $43,000 are expected. The partnership balance sheet at the start of liquidation is as follows: Cash $39,000                         Liabilities $179,000 Accounts receivable 69,000  Butler, loan 39,000 Office equipment (net) 59,000  Butler, capital (25%) 95,000 Building (net) 155,000             Osman, capital (25%) 39,000 Land 145,000                          Ward, capital (50%) 115,000 Total assets $467,000        Total liabilities and capital $467,000 Prepare a predistribution plan for this partnership                                 Butler, Loan and Capital    Osman, Capital    Ward, Capital Beginning…

The TimpRiders LP has operated a motorcycle dealership for a number of years. Amir is the limited partner, Francesca is the general partner, and they share capital and profits equally. Francesca works full time managing the partnership. Both the partnership and the partners report on a calendar-year basis. At the start of the current year, Amir and Francesca had basis of $10,000 and $3,000, respectively, and the partnership did not have any liabilities. During the current year, the partnership reported the following results from operations: Net sales $ 650,000 Cost of goods sold 500,000 Operating expenses 160,000 Short-term capital loss 2,000 Tax-exempt interest 2,000 §1231 gain 6,000 On the last day of the year, the partnership distributed $3,000 each to Amir and Francesca.  What outside basis do Amir and Francesca have in their partnership interests at the end of the year? How much of their losses are currently not deductible by Amir and Francesca because of the…

Martin, Mark, and Marvin formed a retail clothing partnership named M Clothiers and conducted a business for many years, buying most of their clothing from Hill, a wholesaler. On January 15, Marvin retired from the business, but Martin and Mark decided to continue it. As part of the retirement agreement, Martin and Mark agreed in writing with Marvin that Marvin would not be responsible for any of the partnership debts, either past or future. On January 15, the partnership published a notice of Marvin’s retirement in a newspaper of general circulation where the partnership carried on its business. BeforeJanuary15,HillwasacreditorofMClothiersto theextentof$10,000,andonJanuary30,heextendedadditionalcreditof$5,000.Hillwasnotadvisedanddidnotin factknowofMarvin’sretirementandthechangeofthepartnership.OnJanuary30,Ray,acompetitorofHill,extended creditforthefirsttimetoMClothiersintheamountof $3,000.Rayalsowasnotadvisedanddidnotinfactknowof Marvin’sretirementandthechangeofthepartnership. On…