Mr Z sold 25 of his business to his son S The resulting part

Mr. Z sold 25% of his business to his son, S. The resulting partnership had a profit of $60,000. Capital is a material income producing factor. The father performed services worth $30,000, which was reasonable compensation: the son performed no services. What is the maximum amount of income that S can report from the partnership for the year? A. $7500 B. $15,000 C. $22500 or D. $45000

Calculat maximum amount of income for S :

Mr. S (30000*25%)

so answer is a) $7500

Partnership profit	60000
Less: Service performed worth	(30000)
Allocable profit	30000
Mr. Z (30000*75%)	22500
Mr. S (30000*25%)	7500

Mr. Z sold 25% of his business to his son, S. The resulting partnership had a profit of $60,000. Capital is a material income producing factor. The father perfo

Mr Z sold 25 of his business to his son S The resulting part

Solution

Get Help Now

Submit a Take Down Notice