Mr. and Mrs. Velotta are self-employed professional musicians. Their average annual income from performance fees and music lessons is $130,000. The couple wants to shift income to their two children, ages 19 and 22. Can Mr. and Mrs. Velotta organize their music business as a family
Explain whether Person V and his wife can organize their music business as a family partnership and give each child a 25 percent interest.
Explanation of Solution
In the professional service business of Person V and his wife, capital is not a material income-producing factor. Hence, for shifting earned income to their children, a family partnership cannot be formed by them.
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Chapter 12 Solutions
Principles Of Taxation For Business And Investment Planning 2020 Edition
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- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT