Ask Question
BusinessBusiness
30 October, 23:09

Enercio contributes $100,000 in exchange for a 40% interest in the calendar year ABC LLC, which is taxed as a partnership. In 2015, the LLC generates $80,000 of ordinary taxable income. Enercio withdrew $10,000 from the partnership during 2015. Enercio is taxed on what amount of the LLC's 2015 income? On how much of the $10,000 distribution will Enercio be taxed?

+5
Answers (2)
  1. 30 October, 23:42
    0
    A. $32,000

    B. $0

    Explanation: Limited Liability Partnership is a partnership that combines the corporate benefit of limited liability for the owners with the benefits of partnership taxation, including the single level of tax and special allocations of income, losses, and cash flows.

    Enercio contribution = $100,000

    Ordinary income = (40% X 80,000)

    Enercio withdrawal = $10,000

    Partner's Basis:

    (contribution + ordinary income - withdrawal)

    = ($100,000 + (40% X 80,000) - $10,000)

    = ($100,000 + $32,000 - $10,000)

    = $122,000 basis

    A. Enercio will only be taxed on its proportion of the ordinary income that is ($80,000 X 40%) = $32,000

    B. Partners do not pay tax on

    withdrawals. You will only pay tax on a withdrawal if you withdraw more than your personal basis.
  2. 31 October, 01:56
    0
    a) Enercio is taxed on $32,000 of the LLC's income

    b) There will be no taxation on the $10,000 withdrawn

    Explanation:

    There are two events in the business

    The first event is that Enercio contributes $100,000 to make up for 40% of the interest of ABC LLC

    The second event is the withdrawal of $10,000 during the year 2015

    Answer

    1) From the partnership income of $80,000, Enercio will be taxed his full 40% of the income. Meaning he will be taxed 0.4 x $80,000 = $32,000. In other words, his full 40% of the income will stil be taxed regardless of the withdrawal

    2) from the $10,000 collected, there will be no taxation because it is regarded as just a regular withdrawal by Enercio from the partnership.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Enercio contributes $100,000 in exchange for a 40% interest in the calendar year ABC LLC, which is taxed as a partnership. In 2015, the LLC ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
Which pitfall to sound economic reasoning is illustrated when a person comments that "capitalists focus only on profits and don't care about their workers"? A. Abstraction B. Biases C. The fallacy of composition D.
Answers (2)
Why an employee must demonstrate respect on the job
Answers (1)
The automobile industry in both Brazil and Mexico is thriving. If you were a government official from an African country (such as Morocco, Nigeria, or South Africa) who has visited both countries and has been very impressed, which approach would you
Answers (1)
Rodriguez Corporation issues 12,000 shares of its common stock for $210,500 cash on February 20. Prepare journal entries to record this event under each of the following separate situations. a. The stock has a $14 par value. b.
Answers (1)
When the revenue is more than the costs for a business, it is making a profit. True False
Answers (1)
New Questions in Business
Kane Company's employees earn vacation time at the rate of 1 hour per 40-hour work period. The vacation pay vests immediately (that is, an employee is entitled to the pay even if employment terminates).
Answers (1)
Digg Co. installs a manufacturing machine in its factory at the beginning of the year at a cost of $36,000. The machine's useful life is estimated at 10 years, or 300,000 units of product, with a $6,000 salvage value.
Answers (1)
Which of the following actions will likely cause a project to fail? A) dedicating valuable team member time to identify risk events B) spending project funding to procure needed tools and spare parts C) unclear or conflicting stakeholder
Answers (1)
Mcgregor company allows customers to pay with credit cards. the credit card company charges mcgregor 2% of the sale. when a customer uses a credit card to pay mcgregor $300 for services provided, mcgregor would:
Answers (1)
Net worth is the difference between a firm's assets and its liabilities. a. True b. False
Answers (1)
Home » Business » Enercio contributes $100,000 in exchange for a 40% interest in the calendar year ABC LLC, which is taxed as a partnership. In 2015, the LLC generates $80,000 of ordinary taxable income. Enercio withdrew $10,000 from the partnership during 2015.
Sign Up Forgot Password?