Question

This year, FGH Partnership generated $600,000 ordinary business income. FGH has two equal partners: Triad LLC and Beta, an S corporation. Triad LLC has three members: Mr. T, who owns a 40 percent interest; Mrs. U, who owns a 35 percent interest; and V Inc., which owns a 25 percent interest. Beta has 100 shares of outstanding stock, all of which are owned by Ms. B. Identify the taxpayers who must pay tax on the partnership income, and determine how much income must be reported by each.

Answer 1

Answer:

Mr T $120,000

Mrs U $105,000

V inc $75,000

Ms B $300,000

Triad LLC $0

Beta $0

Explanation:

Since the FHG partnership has generated $600,000 ordinary business income. It contains two equal partners i.e Triad LLC and Beta, an S corporation. i.e Triad LLC has $300,000 and the Beta has $300,000

Now the Triad LLC has three members. Their owing percentage are as follows

Mr T = 40% × $300,000 = $120,000

Mrs U = 35% × $300,000 = $105,000

V inc = 25% × $300,000 = $75,000

The Beta has 100 shares i.e means it has 100% that is owned by Ms. B so her income is $300,000

Now the income generated by each one are as follows

Mr T $120,000

Mrs U $105,000

V inc $75,000

Ms B $300,000

Triad LLC $0

Beta $0