You have a 25% interest in a Limited Partnership which produces $600,000 in total profits this year. You are in the 40% tax bracket (combined federal and state). Tax on your share of the profits will be:
a) 40% x ¼ (your share) of 600,000 = 60,000
b) 40% x ¼ of 360,000 (because the partnership pays tax of 40% on its profits so you receive only your share of the remaining amount) = 36,000
c) 25% x ¼ (your share) of 600,000 = 37,500
d) 40% x ¼ (your share) of 600,000 x 2 (because of double taxation) = 120,000
Answer: a) 40% x ¼ (your share) of 600,000 = 60,000
You might also like to view...
Which of the following statements is true about Asian Americans?
a. They are the fastest growing population among minority groups. b. They are the least educated amongst all ethnic minority groups. c. They have the least spending power among all ethnic groups. d. They seldom retain their core Asian values.
A class-action lawsuit was brought against a national burger chain, charging that its food contributed to the nationwide obesity epidemic
The suit was eventually dismissed, but critics continue to point out the health dangers of many fast food menu items. From the description, it can be concluded that these critics are concerned that the fast food industry is ________. A) using high-pressure sales tactics B) creating deceptive promotions C) engaging in deceptive pricing D) utilizing misleading packaging E) selling harmful products