Answer:
The cash distribution is subtracted from the investor's partnership basis
Explanation:
When partners wish to distribute more money than their earnings, then the amount of money distributed above the earnings' distribution must be subtracted from the partners' capital accounts.
For example, 3 partners each invested $50,000 in a partnership. The current year's profit is only $10,000, but the partners wish to distribute $25,000. The difference between the distribution and the profit = $15,000 which will be subtracted from the capital account (= $150,000 - $15,000 = $135,000).
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Answer: Option (A)
Explanation:
Here, in this particular case we can state that the preferred stocks issued by the Saturn Corporation are convertible. Here, under this scenario the these stocks are referred to as the preferred shares which tends to include the valid option for the individual i.e. the holder to convert their shares into a proportion of the common shares after a time period.
Answer:
B) $1,260,000
Explanation:
The computation of the value of the depreciation tax shield is shown below:
= Annual depreciation expense × marginal corporate tax rate
= $3,600,000 × 35%
= $1,260,000
Simply we multiplied the annual depreciation expense with the marginal corporate tax rate, not the average corporate tax rate so that depreciation tax shield will come.