Title: ACC 455 Week 5 Learning Team Assignment Week Five Problem Set Sample content: Week Five Problem Set ACC/455 Corporate Taxation I The January payment to Javier is really a liquidating distribution. There are two kinds of payments in this deal. The 1st ten distributions of $10,000 cash signify payments for Javiers property interest in the partnership and therefore are liquidating distributions. The balance $20,000 cash payments in November and December surpass Javiers basis in the partnership and also have been decided with no consideration to partnership revenue. As a consequence, the partnership may subtract the distribution and Javier should realize the distribution as ordinary income. Javier doesnt acknowledge a profit on liquidation by using this retirement method and the partnership gets the advantage of a $20,000 usual deduction. Retirement Structure Tax Consequences Distributions Javier JKL Partnership Cash distribution got (10 payments of $10,000

1. ACC 455 Week 5 Learning Team Assignment Week Five Problem Set
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2. ACC 455 Week 5 Learning Team Assignment Week Five Problem Set
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Week Five Problem Set ACC/455 Corporate Taxation I The January payment to
Javier is really a liquidating distribution. There are two kinds of payments in this
deal. The 1st ten distributions of $10,000 cash signify payments for Javiers
property interest in the partnership and therefore are liquidating distributions. The
balance $20,000 cash payments in November and December surpass Javiers
basis in the partnership and also have been decided with no consideration to
partnership revenue. As a consequence, the partnership may subtract the
distribution and Javier should realize the distribution as ordinary income. Javier
doesnt acknowledge a profit on liquidation by using this retirement method and the
partnership gets the advantage of a $20,000 usual deduction. Retirement
Structure
Tax Consequences
Distributions
Javier
JKL Partnership
Cash distribution got (10 payments of $10,000 monthly for 10 months)
$ 100,000
Less: Basis in partnership interest
$ (100,000)
Profit acknowledged on liquidating distribution

3. $ –
Subject to capital gains tax
Subject to capital profits or loss
Payment more than partnership interest (2 payments of $10,000 monthly for just
two months)
$ 20,000
Taxable as ordinary income
Ordinary deduction C: 9-32 a. Ordinary Income Sales
$450,000 Price of Items Sold -210,000 Long-term capital
gain +12,000 Long-term capital loss -10,000 Assured
payment -30,000 Section 1231 +18,000
Foods and expenditures -11,600 Total Usual Income
$326,400 Stated Items Dividends $15,000 Tax-exempt
interest +4,000 Section 1245 gain +33,000 Short-
term loss +9,000 Wear and tear +27,000
Interest Expenditure Business Liability +42,000 Stock
+9,200 Tax-exempt +2,800 Principal p
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