The ABC Partnership agreement provides for guaranteed payments for services rendered of $70,000, $64,000, and $60,000 for Adam, Brian, and Cynthia, respectively. After the guaranteed payments are deducted, the partnership agreement calls for sharing of profits and losses as follows: Adam – 40%, Brian – 35%; Cynthia – 25%. Each partner is a general partner. If net profits before the guaranteed payments are $176,000, what amount of income from the partnership should each partner report on his or her individual income tax return (what amount for each partner is subject to self-employment tax)?

The ABC Partnership agreement provides for guaranteed payments for services rendered of $70,000, $64,000, and $60,000 for Adam, Brian, and Cynthia, respectively. After the guaranteed payments are deducted, the partnership agreement calls for sharing of profits and losses as follows: Adam – 40%, Brian – 35%; Cynthia – 25%. Each partner is a general partner. If net profits before the guaranteed payments are $176,000, what amount of income from the partnership should each partner report on his or her individual income tax return (what amount for each partner is subject to self-employment tax)?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter15: Partnership Accounting

Section: Chapter Questions

Problem 1PA: The partnership of Tatum and Brook shares profits and losses in a 60:40 ratio respectively after...

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