Reference no: EM133112039

Question - Assume the same facts as in the last problem. Further assume that at the beginning of Boomers taxable year, Drake had an outside basis in his partnership interest of 500,000 and Josh had an outside basis in his partnership interest of $300,000. Drake has a book capital account of $600,000 and Josh has a book capital account of 400,000 at the beginning of the taxable year. Also Drake has withdrew 10,000 dollars from the partnership while Josh has withdrawn 15,000.

Determine each partner's share of taxable income and separately stated items.

Determine each partner's outside basis and book capital accounts at the end of the tax year.

Drake and Josh are equal partners in Boomer, LLC, an entity taxed as a partnership. The Boomer LLC agreement provides that all allocations of income, gain, loss, and deduction are to be made 60-40 between Drake(60%) and Josh(40%). Boomer sells and repairs rollers skates. Boomer had the following items of income and expense for its taxable year ended December 31, 2021.

Gross receipts from roller skate sales $420,000

Gross receipts from roller skate repairs $23,000

Cost of goods sold $78,000

Depreciation (MACRS depreciation 4,000) $20,000

Salaries (employees) $67,000

Insurance (non-partners) $20,000

Utility expenses $12,000

Gain from the sale of equipment (held 4 years)

Section 1245 gain (recapture) $16,000

Section 1231 gain $3,000

Dividends paid by U.S. corporation $12,000

Charitable contributions $5,000

Tax-exempt interest income $1,000

Long-term capital gain $16,400

Long-term capital Loss $12,300

Short-term capital loss $45,000

Short-term capital gain $27,200