Business College

In X1, Adam and Jason formed ABC, LLC, a car dealership in Kansas City. In X2, Adam and Jason realized they needed an advertising expert to assist in their business. Thus, the two members offered Cory, a marketing expert, a one-third capital interest in their partnership for contributing his expert services. Cory agreed to this arrangement and received his capital interest in X2. If the value of the LLC's capital equals $180,000 when Cory receives his one-third capital interest, which of the following tax consequences does not occur in X2?A. Cory reports $60,000 of ordinary income in X2.B. Adam, Jason, and Cory receive an ordinary deduction of $20,000 in X2.C. Adam and Jason receive an ordinary deduction of $30,000 in X2.D. Cory reports $60,000 of ordinary income in X2, and Adam and Jason receive an ordinary deduction of $30,000 in X2.

Answers

Answer 1

Answer: B. Adam, Jason, and Cory receive an ordinary deduction of $20,000 in X2.

Explanation:

Based on the information given, since the value of the LLC's capital equals $180,000 after Cory receives his one-third capital interest, Cory will report (⅓ × $180000) = $60,000 of ordinary income in X2.

Also, Adam and Jason will receive an ordinary deduction of $30,000 in X2. The sentence that "Adam, Jason, and Cory receive an ordinary deduction of $20,000 in X2" is wrong. They do not get sane amount as Cory gets a higher amount.

Related Questions

Define corporate culture. What are the components of a good corporate culture? Why do you think that corporate culture has such a huge impact on the success of a company? Please share your thoughts.

Answers

Answer:

Corporate culture, also known as company culture, refers to a set of beliefs and behaviors that guide how a company’s management and employees interact and handle external business transactions.

The management of Penfold Corporation is considering the purchase of a machine that would cost $270,000, would last for 5 years, and would have no salvage value. The machine would reduce labor and other costs by $60,000 per year. The company requires a minimum pretax return of 12% on all investment projects. The net present value of the proposed project is closest to:______.
a. $(11,700).
b. $(53,700).
c. $(269,997).
d. $(113,700).

Answers

Answer:

The correct answer is B.

Explanation:

Giving the following information:

Initial investment= $270,000

Cash flow= $60,000

Number of years= 5

Discount rate= 12%

To calculate the net present value (NPV), we need to use the following formula:

NPV= -Io + ∑[Cf/(1+i)^n]

∑[Cf/(1+i)^n]:

Cf1= 60,000/1.12= 53,571.43

Cf2= 60,000/1.12^2= 47,831.63

.....

Cf5= 60,000/1.12^5= 34,045.61

∑[Cf/(1+i)^n]= 216,286.57

Now, the NPV:

NPV= -270,000 + 216,286.57

NPV= -53,713.43

Other Questions
Which detail from ""The Future of Money"" supports the opinion that digital currency is safer than traditional currency? Which sentence correctly describes this image?OA.il se brosse les dents chaque matin.B.Il se peigne chaque matin.C.il se baigne chaque matin.D. Il s'habille chaque matin.*** It is A Man brushing his hair** History Question, I feel like the anwser is A But i just wanna be sure An adult takes 400 mg of ibuprofen. Two hours later, there is 201.6 mg ofibuprofen left in the persons system. How long will it take until there is only 25 mgof ibuprofen left in the person's system? Show all work and round your answer tothree decimal places. Can somebody please help? It don't get it How to Become More Self Aware Self-awareness involves understanding who you are and what you stand for. In order to be self-aware you need to spend time pondering your personal vision, values, needs, tendencies, skills, and deficiencies. This activity is important because self-awareness will enhance your ability to lead and to surround yourself with people who complement your own leadership deficiencies. HELP PLSSS NOWW!!!!!!! Identify at least three rivers and their location in Asia. I don't really understand how to do this if you could help please help asap, thank you The management of Penfold Corporation is considering the purchase of a machine that would cost $270,000, would last for 5 years, and would have no salvage value. The machine would reduce labor and other costs by $60,000 per year. The company requires a minimum pretax return of 12% on all investment projects. The net present value of the proposed project is closest to:______.a. $(11,700).b. $(53,700).c. $(269,997).d. $(113,700). What does meta mean?a.largec.seeingb.awarenessd.thinking What effect does the Earth's surface have on solar radiation? PLEASE I need help really bad I only have 10 minutes left to turn it in!! Ill mark you as brainliest please!!! Read the sentence from The Adventures of Tom Sawyer.Tom gave up the brush with reluctance in his face, but alacrity in his heart.What is the meaning of the word alacrity as it is used in the sentence?Question 17 options:hesitationfrustrationplayfulnesseagerness In which stage of mitosis do chromosomes first appear?AprophaseBmetaphaseanaphaseDtelophase please help!!!I dont know how to solve PLEASE HE L P IT WOULD mean the world to me ______________ is a printing process in which an image is photographed through a screen on to a sensitized printing plate that after development is etched.a.Daguerreotypec.Photogravureb.Cyanotyped.Digital imaging What is the intensity of sound produced by an elephant's call if it has a power of 0.45 W and you are standing 32.5 m away from the lumbering beast Is the following statement TRUE or FALSE? Select the best choice from the following to justify youranswer.log(e) = ln(e)O FALSE. The two logarithms have different bases so their values are not the same.O FALSE. The value of log(e) is undefined.O TRUE. Both logarithms are equal to e.O TRUE. Natural logarithms and common logarithms are always equal to each other.