jim johnson has 40% interest in
Richards and Johnson, LLP. The
partnership has the following activity for the year
sales 180,0000
cost of goods 105,000
guaranted payment richard 25,000
depreciation 11,000
interest expense 1000
tax exempt income 1500
healthe insurance premium jim 700
health insurance premim ron 700
calcute jim share of ordinary i ncome from the partnership. calcute jim shareof separately stated items that will appear o n his schedule k-1 from richard johnson , llp
To calculate Jim's share of ordinary income from the partnership, we need to consider the following components:
1. Sales: $180,000
2. Cost of goods sold: $105,000
3. Guaranteed payment to Richard: $25,000
4. Depreciation: $11,000
5. Interest expense: $1,000
To determine the ordinary income, we need to subtract the cost of goods sold, guaranteed payment, depreciation, and interest expense from the sales.
Ordinary Income = Sales - (Cost of Goods Sold + Guaranteed Payment + Depreciation + Interest Expense)
Substituting the given values:
Ordinary Income = $180,000 - ($105,000 + $25,000 + $11,000 + $1,000)
= $180,000 - $142,000
= $38,000
Next, to calculate Jim's share of separately stated items that will appear on his Schedule K-1, we need to consider the following components:
1. Tax-exempt income: $1,500
2. Health insurance premiums - Jim: $700
3. Health insurance premiums - Ron: $700
These are considered separately stated items because they are reported separately on the partnership's tax return. To calculate Jim's share, we need to apply his 40% interest to each item separately.
Share of Tax-Exempt Income = Tax-Exempt Income * Interest Percentage
= $1,500 * 40%
= $600
Share of Health Insurance Premiums (Jim) = Health Insurance Premiums (Jim) * Interest Percentage
= $700 * 40%
= $280
Share of Health Insurance Premiums (Ron) = Health Insurance Premiums (Ron) * Interest Percentage
= $700 * 40%
= $280
Therefore, Jim's share of ordinary income from Richards and Johnson, LLP is $38,000, and his share of separately stated items that will appear on his Schedule K-1 is $600 for tax-exempt income, $280 for health insurance premiums (Jim), and $280 for health insurance premiums (Ron).