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Mike and Penelope are equal partners in MP partnership. The partnership, Mike, and Penelope are calendar year taxpayers. The partnership incurred the...
Mike and Penelope are equal partners in MP partnership. The partnership, Mike, and Penelope are calendar year taxpayers. The partnership incurred the following items in the current year:a. Sales $450,000b. Cost of goods sold $210,000c. Dividend on corporate investments $ 15,000d. Tax-exempt interest income $ 4,000e. Section 1245 gain (recapture)on equipment sale $ 33,000f. Section 1231 gain on equipmentsale $ 18,000g. Long-term capital gain on stocksale $ 12,000h. Long-term capital loss on stocksale $ 10,000i. Short-term capital loss on stocksale $ 9,000j. Deprecition (no Sec. 179 orbonus depreciation components) $ 27,000k. Guaranteed payment to Pamela $ 30,000l. Meals and entertainment expenses $ 11,600m. Interest expense on loans allocable to:Business debt $ 42,000Stock investments $ 9,200Tax-exempt bonds $ 2,800n. Principal payment on businessloan $ 14,000o. Charitable contributions $ 5,000p. Distributions to partners ($40,000 each) $ 80,0001. Compute the partnership's ordinary income and separately stated items.2. Show Mike's and Penelope's shares of the items in Part a.3. Compute Mike's and Penelope's ending basis in their partnership interests assuming their beginning balances are $150,000 each. i dont understand how to start part 1, can somebody help me understand?
