Principles Of Taxation For Business And Investment Planning 2020 Edition
23rd Edition
ISBN: 9781259969546
Author: Sally Jones, Shelley C. Rhoades-Catanach, Sandra R Callaghan
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 12, Problem 6QPD
a.
To determine
Discuss each owner’ personal liability for this judgement, if QRT is a general
b.
To determine
Discuss each owner’ personal liability for this judgement, if QRT is an LLP.
c.
To determine
Discuss each owner’ personal liability for this judgement, if QRT is an LLC.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Robert is the CEO of a closely held business, and he would like to provide life insurance to all of his employees as a fringe benefit. Robert would like life insurance that permits him to pay the premium, so long as it is deductible as a business expense and permits the employee to designate the beneficiary of the policy. Which one of the following is the most appropriate insurance product for Robert's situation?
A)Robert should enter into an entity buy-sell agreement with each employee using cash value life insurance.
B)Robert should provide group term life insurance.
C)Robert should provide key person life insurance.
D)Robert should provide split-dollar life insurance.
A, B and C formed a commercial partnership. D represented himself as a partner in the partnership to E who, on the belief of such representation, extended credit of P50,000 to the partnership. Assuming only B and C consented to such representation, who shall be liable to E?
a. B, C and D are partners by estoppels and thus, are liable to E?
b. Only partners A, B and C are liable to E for the benefit extended to them.
c. Only D who made the representation is liable to E.
d. All of A, B, C and D are liable because of partnership liability for the credit extended to the partnership by E.
Questions 4 and 5 are based on the following:
For several years, Peejay and Joshua have been operating their own retail pharmacies as sole proprietorships. They
decided that several advantages could be gained if they combined their businesses into one operation. They leased
a new facility and began operations as a partnership on January 2, 2020. Peejay was able to find a buyer for his
prior business and sold it as a going concern. Joshua did not have an opportunity to sell his business so he transferred
as many asserts as possible to the new partnership.
The following assets were contributed by Peejay and Joshua to start their new business:
Peejay
Cash
Accounts Receivable
Inventory
Furnishings
Ace Dep-Furnishing
Office Equipment
Acc Dep-Office Equipment
Computer System
Acc Dep-Computer System
Total
Accounts Payable (assumed by Partnership)
4. How much is the opening capital of Joshua?
A. P396,500
A.
B.
B. P375,000
C
D.
375,000
37,500 Bonus to Joshua
27,825 Bonus from Peejay
375,000…
Chapter 12 Solutions
Principles Of Taxation For Business And Investment Planning 2020 Edition
Ch. 12 - Mr. and Mrs. Velotta are self-employed...Ch. 12 - Prob. 2QPDCh. 12 - Ms. Johnson is eager to create a family...Ch. 12 - Discuss the tax and nontax reasons why the stock...Ch. 12 - Mr. Eros operates an antique store located on the...Ch. 12 - Prob. 6QPDCh. 12 - Prob. 7QPDCh. 12 - Prob. 8QPDCh. 12 - Prob. 9QPDCh. 12 - Prob. 10QPD
Ch. 12 - Prob. 11QPDCh. 12 - Ms. Knox recently loaned 20,000 to her closely...Ch. 12 - Explain the logic of the tax rate for both the...Ch. 12 - Prob. 14QPDCh. 12 - Prob. 15QPDCh. 12 - Prob. 16QPDCh. 12 - Mr. Tuck and Ms. Under organized a new business as...Ch. 12 - Grant and Marvin organized a new business as a...Ch. 12 - Prob. 3APCh. 12 - Ms. Kona owns a 10 percent interest in Carlton...Ch. 12 - Mrs. Franklin, who is in the 37 percent tax...Ch. 12 - Prob. 6APCh. 12 - Prob. 7APCh. 12 - Prob. 8APCh. 12 - Prob. 9APCh. 12 - Prob. 10APCh. 12 - Prob. 11APCh. 12 - Prob. 12APCh. 12 - Prob. 13APCh. 12 - Ms. Xie, who is in the 37 percent tax bracket, is...Ch. 12 - Prob. 15APCh. 12 - In 1994, Mr. and Mrs. Adams formed ADC by...Ch. 12 - Prob. 17APCh. 12 - Prob. 18APCh. 12 - Prob. 19APCh. 12 - Prob. 20APCh. 12 - Prob. 21APCh. 12 - Prob. 1IRPCh. 12 - Prob. 2IRPCh. 12 - Prob. 3IRPCh. 12 - REW Inc. is closely held by six members of the REW...Ch. 12 - Prob. 5IRPCh. 12 - Prob. 6IRPCh. 12 - Prob. 7IRPCh. 12 - Prob. 8IRPCh. 12 - Prob. 9IRPCh. 12 - Prob. 10IRPCh. 12 - Prob. 2TPCCh. 12 - Prob. 3TPC
Knowledge Booster
Similar questions
- Eight limited partners filed a lawsuit in the Lucas County Court of Common Pleas, alleging that the general partners in 10 different limited partnerships had engaged in an extensive pattern of self-dealing that had involved converting partnership property for their own personal use. Also named in the lawsuit was the accounting firm of Donald J. Goldstein, CPA, a resident of Florida, and Goldstein, Lewis, and Company, a professional corporation located in Florida. The plaintiffs claimed that the accountant and the accounting firm had known of the general partners’ misconduct and were therefore liable to the plaintiff for that malpractice. The accountant and the accounting firm decided to end the Page 91suit as quickly as possible. Consequently, they filed a motion for dismissal. The motion stated that the courts of Ohio lacked personal jurisdiction over them because they were from Florida. They further stated that they did not solicit business in Ohio, maintained no place of business in…arrow_forward1. Yvvone and Maryfrance formed a general professional partnership for the purpose of exercising their common profession as CPAS. During the year, the partnership earned a net income of P250,000 but Yvonne and Maryfrance decided not to withdraw their shares in the income in order to use it in buying fixtures and more advanced equipment in the office. If they agreed to a profit and loss ratio of 50:50, how much income is taxable to Yvvone and Maryfrance? a. b. C. d. a. b. Yvvone P250,000 None 125,000 None 2. In the preceding problem, assuming Yvvone and Maryfrance decided to withdraw half of their share in the net income and used the other half in buying fixtures and more advanced equipments in the office. How much income is taxable to each? Yvvone Maryfrance C. d. Maryfrance None P250,000 125,000 None P250,000 None 125,000 62,500 None P250,000 125,000 62,500arrow_forwardDan, Kaye and Umi are general partners in a merchandising firm. Having contributed equal amounts to the capital, they also agree on equal distribution of whatever net profit was realized per fiscal period. After two years of operation, however, Umi conveys her whole interest in the partnership to Jessie, without the knowledge and consent of Dan and Kaye. Can Jessie participate in the management of the partnership? What is the right of Jessie with respect to the distribution of a net profit of 360,000 pesos which was realized after the purchase of Umi’s interest?arrow_forward
- Fox, Dodge, and Gilbey agreed to become limited partners in Palatine Ventures, a limited partnership. In a signed writing, each agreed to contribute $20,000. Fox’s contribution consisted entirely of cash, Dodge contributed $12,000 in cash and gave the partnership her promissory note for $8,000, and Gilbey’s contribution was his promise to perform two hundred hours of legal services for the partnership. a. What liability, if any, do Fox, Dodge, and Gilbey have to the partnership by way of capital contribution? b. If Palatine Ventures had been formed as a limited liability company (LLC) with Fox, Dodge, and Gilbey as members, what liability, if any, would Fox, Dodge, and Gilbey have to the LLC by way of capital contribution?arrow_forwardDexter Thomas and Herman Walker, attorneys, operate a law practice. They would like to expand the expertise of their firm. In anticipation of this, they have agreed to admit Jewell Lorenzo to the partnership on January 1, 20X1. The capital account balances on January 1, 20X1, after revaluation of assets, are Thomas, $179,000, and Walker, $139,000. Net income or net loss is shared equally. Required: Prepare the entries in general journal form to record the admission of Lorenzo to the partnership on January 1, 20X1, under each of the following independent conditions: 1. Thomas sells one-half of his interest in the partnership to Lorenzo for $127,000 cash. 2. Thomas sells one-half of his interest in the partnership to Lorenzo for $83,000 cash. 3. Lorenzo invests $119,000 in the business for a 25 percent interest in the partnership. 4. Lorenzo invests $123,000 in the business for a 30 percent interest in the partnership. Analyze: Assume that Lorenzo invests $119,000 in the business for a…arrow_forwardDexter Thomas and Herman Walker, attorneys, operate a law practice. They would like to expand the expertise of their firm. In anticipation of this, they have agreed to admit Jewell Lorenzo to the partnership on January 1, 20X1. The capital account balances on January 1, 20X1, after revaluation of assets, are Thomas, $179,000, and Walker, $139,000. Net income or net loss is shared equally. Required: Prepare the entries in general journal form to record the admission of Lorenzo to the partnership on January 1, 20X1, under each of the following independent conditions: 1. Thomas sells one-half of his interest in the partnership to Lorenzo for $127,000 cash. 2. Thomas sells one-half of his interest in the partnership to Lorenzo for $83,000 cash. 3. Lorenzo invests $119,000 in the business for a 25 percent interest in the partnership. 4. Lorenzo invests $123,000 in the business for a 30 percent interest in the partnership. Analyze: Assume that Lorenzo invests $119,000 in the business for a…arrow_forward
- Moustapha and Ava want to form a business to buy and sell small appliances. They will both actively work in the business. They are concerned about personal liability. They estimate the company will not be profitable for five years and they want to be able to deduct any losses. Which form of entity should they use to accomplish their objectives? O limited partnership O any of the listed entities would accomplish their objectives O limited liability company O general partnershiparrow_forwardDexter Thomas and Herman Walker, attorneys, operate a law practice. They would like to expand the expertise of their firm. In anticipation of this, they have agreed to admit Jewell Lorenzo to the partnership on January 1, 20X1. The capital account balances on January 1, 20X1, after revaluation of assets, are Thomas, $340,000, and Walker, $300,000. Net income or net loss is shared equally. Required:Prepare the entries in general journal form to record the admission of Lorenzo to the partnership on January 1, 20X1, under each of the following independent conditions: Thomas sells one-half of his interest in the partnership to Lorenzo for $276,000 cash. Thomas sells one-half of his interest in the partnership to Lorenzo for $188,000 cash. Lorenzo invests $260,000 in the business for a 25 percent interest in the partnership. Lorenzo invests $268,000 in the business for a 30 percent interest in the partnership. Analyze:Assume that Lorenzo invests $260,000 in the business for a 25 percent…arrow_forwardAdams, a consulting engineer, entered into a partnership with three others for the practice of their profession. The only written partnership agreement is a brief document specifying that Adams is entitled to 55 percent of the profits and the others to 15 percent each. The venture is a total failure. Creditors are pressing for payment, and some have filed suit. The partners cannot agree on a course of action. Explain how many of the partners must agree to achieve each of the following objectives? a. ToaddJones,alsoanengineer,asapartner,Jonesbeing willingtocontributeasubstantialamountofnewcapital. b. To sell a vacant lot held in the partnership name, which had been acquired as a future office site for the partnership. c. To move the partnership’s offices to less expensive quarters. d. To demand a formal accounting. e. To dissolve the partnership. f. To agree to submit certain disputed claims to arbitration, which Adams believes will prove less expensive than litigation. g. To sell all…arrow_forward
- Nancy Freeley has been operating an apartment-locator service as a sole proprietorship. She and Melissa Marcellus have decided to form a partnership. Freeley's contribution consists of Cash, $6,000; Accounts Receivable, $12,000; Furniture, $13,000; Building (net), $53,000; and Notes Payable, $17,000. To determine Freeley's equity in the partnership, she and Marcellus hire an independent appraiser. The appraiser values all the assets and liabilities at their book value, except the building, which has a current market value of $100,000. Also, there are additional Accounts Payable of $3,000 that Freeley will contribute. Marcellus will contribute cash equal to Freeley's equity in the partnership. Requirements 1. Journalize the entry on the partnership books to record Freeley's contribution. 2. Journalize the entry on the partnership books to record Marcellus's contribution.arrow_forwardJohn, Sal and Pam form a partnership to operate an accounting business. For each of the situations given below, indicate the amounts requested. a. John contributes property with a basis of $45,000 and subject to a $75,000 liability to the partnership for a one-third partnership interest, worth $105,000. The partnership assumes the liability. the amount of income or gain recognized by the partner the partner’s basis in the partnership immediately after the contribution including the allocation of liabilities. b. Sal contributes property with a basis of $25,000 and a fair market value of $105,000 to the partnership for a one-third partnership interest. the amount of income or gain recognized by the partner the partner’s basis in the partnership immediately after the contribution including the allocation of liabilities. c. Pam performs services valued at $105,000 for the partnership for a one=third interest in the partnership. the amount of income or gain recognized by the…arrow_forwardNancy Finch has been operating an apartment-locator service as a sole proprietorship. She and Melissa Michaels have decided to form a partnership. Finch's contribution consists of Cash, $3,000; Accounts Receivable $9,000; Fumiture, $13,000; Building (net), $58,000; and Notes Payable, $21,000. To determine Finch's equity in the partnership, she and Michaels hire an independent appraiser. The appraiser values all the assets and liabilities at their book value, except the building, which has a current market value of $96,000. Also, there are additional Accounts Payable of $10,000 that Finch will contribute. Michaels will contribute cash equal to Finch's equity in the partnership. Read the requirements ge Requirement 1. Journalize the entry on the partnership books to record Finch's contribution. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) ur - X Date Accounts and Explanation Debit Credit Requirements 1. Journalize the entry on…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
