[IfThereIsaGod]

It starts out like:

Brian Cartwright is a single taxpayer who itemizes deductions and has no dependents. In Year 4, he earned wages of $200,000 from Brandise Corporation, a newly-formed C Corporation of which he is the sole shareholder and only employee. Brandise is not considered to be a personal service corporation or a personal holding company.

In addition, since Year 1 Brian has owned a 50% interest in Technology Plus, Inc., an S Corporation from which he was paid a salary and received distributions in Year 4 (each paid according to the ratio of ownership). Brian is also a 10% limited partner in Wonderland Resorts, a limited liability partnership, which paid him no distributions in Year 4 and in which he had a $300,000 basis at year-end Year 3.

Technology Plus, Inc. and Wonderland Resorts, LLP each issued Brian a K-1 for Year 4 (detail provided below). Brian also received 1099s for taxable interest income from banks in the amount of $3,500 and $15,000 in gambling winnings from a casino.

In addition, Brian owns a fully-depreciated residential rental unit that had income of $25,000 and deductible expenses of $20,000. There are no passive loss carryforward amounts.

Brian made no pension or IRA contributions of any kind for Year 4 and does not plan to do so. He had verifiable gambling losses of $27,000 and is not considered a professional gambler. In Year 3, Brian created a long-term capital loss carryforward from the sale of stock in the amount of $35,000.

Details related to 100% of the activity in Brian’s investment holdings follows:

Then a bunch of numbers but my copy past doesn’t work.

I do not understand how they came up with $1,000 for income from rental real estate, royalties , partnerships, etc.

Their calculation is 5,000+5,000-(3000)-(6000).

Please help me!!!

AUD----92 5/31/12
FAR----92 7/3/12
RED----85 8/3/12
BEC----?? 8/29/12

[IfThereIsaGod]

Im desperate, please help me out here!

AUD----92 5/31/12
FAR----92 7/3/12
RED----85 8/3/12
BEC----?? 8/29/12

[futuremdcpa]

im not on a computer with becker right now, but i remember this sim. it explains it all the way at the bottom. I thought the solution is pretty clear..

REG: PASS || BEC: PASS || AUD: PASS || F: SCORE PENDING..

[IfThereIsaGod]

No it just says the calculation and no explanation! If it had an explanation it would most likely make sense to me. I thought someone could try to help me here. I wi

Brandise Corporation:

Revenues:

Operating revenue 250,000

Interest income 50,000

Expenses (no M-1 adjustments):

Salary 200,000

Office rental expense 12,000

Office supplies 2,000

Utilities 9,000

Tax depreciation/amortization 4,000

Taxable net income = 73,000

Technology Plus, Inc.:

Revenues:

Sales 225,000

Taxable interest income 5,000

Long-term capital gains 40,000

Total revenue = 270,000

Expenses:

Shareholder salaries 150,000

Cost of goods sold 50,000

Operating expenses 12,000

Charitable contributions 1,000

Regular depreciation 3,000

Section 179 depreciation 6,000

Total expenses = 222,000

Net income before distributions 48,000

Distributions to shareholders (20,000)

Wonderland Resorts, LLP:

Revenues:

Rental real estate income 100,000

Taxable interest income 2,000

Total revenues = 102,000

Expenses:

Rental real estate expenses 90,000

Regular depreciation on rental units 70,000

Total expenses = 160,000

Net loss = (58,000)

Solution:

I do not understand how they came up with $1,000 for income from rental real estate, royalties , partnerships, etc.

Their calculation is 5,000+5,000-(3000)-(6000).

AUD----92 5/31/12
FAR----92 7/3/12
RED----85 8/3/12
BEC----?? 8/29/12

[Anonymous]

https://www.cpanet.com/cpa_forum/forum_posts.asp?TID=27932

[IfThereIsaGod]

That does not explain the $6,000. I do not understand how they arrived at that number. And I still do not get what they are saying about the 179 depreciation. I do though get the first two 5,000s.

AUD----92 5/31/12
FAR----92 7/3/12
RED----85 8/3/12
BEC----?? 8/29/12

[Anonymous]

10% of rental real estate income from wonderland

The explanation for the section 179 depreciation is fairly clear. Do you have any questions?

“any dep which is charged on K1 thru ur partnership,Scorp is deducted in Finding ur total income on SCH E

addionally

Sec 179 is also deducted from partnership income while caluculation Self employed income”

[Author]

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