Question

Enercio contributes $100,000 in exchange for a 40% interest in the calendar year ABC LLC, which is taxed as a partnership. This year, the LLC generates $80,000 of ordinary taxable income and has no separately stated income or expenses. Enercio withdrew $10,000 from the partnership during the year. Enercio is taxed on what amount of ABC’s income? On how much of the $10,000 distribution will Enercio be taxed?

Answer 1

Answer:

Enercio would be taxed on $32,000 even though he withdrew $10,000.

Explanation:

Enercio would be taxed on his share of 40% of $80,000 of ordinary taxable income of ABC LLC irrespective of the fact how much has Enercio has withdrawn from the partnership firm. So, here Enercio would be taxed on $32,000 even though he withdrew $10,000.