[Stgeorge]

NINJA Question –

Hi I ran into this problem in Ninja and my question is for Rent Expense. Shouldn’t it be listed separately on Schedule K. That is what is says in my Wiley Book and just wanted to confirm. Below is the Question with explanation.

PDK, LLC, had three members with equal ownership percentages. PDK elected to be treated as a partnership. For the tax year ending December 31, Year 1, PDK had the following income and expense items:

Revenues $120,000

Interest income 6,000

Gain on sale of securities 8,000

Salaries 36,000

Guaranteed payments 10,000

Rent expense 21,000

Depreciation expense 18,000

Charitable contributions 3,000

What would PDK report as nonseparately stated income for Year 1 tax purposes?

A.

$30,000

Correct B.

$35,000

C.

$43,000

D.

$51,000

Exp.

PDK would report $35,000 as nonseparately stated income for Year 1, calculated as follows:

Revenues $120,000

Less: Salaries (36,000)

Less: Guaranteed payments (10,000)

Less: Rent expense (21,000)

Less: Depreciation expense (18,000)

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Nonseparately stated income $ 35,000

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Any income, losses, deductions, or credits that might affect the tax liability of a member in a different manner depending on any other factors in their particular tax situation must be separately stated on the tax return. In this problem, the separately stated items include gain on sale of securities and charitable contributions.

Guaranteed payments to partners are included with the nonseparately stated items.

FAR 81
AUD 65, 84 (Used Ninja MCQ which I say contributed to my huge increase in score I love you Jeff)
REG 87 (CPA excel Wiley Self Study Book, Ninja 10 point combo)
BEC 86! I Must Pass or I lose my FAR Credit, Pray for me(Becker, Wiley, WTB, Ninja MCQ, Ninja Notes)

DONE!!!!!!

Using : Wiley CPA Exam Review Textbook, Wiley TB, Ninja Notes, Ninja MCQ