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Calculate the after-tax cash flows for a partner

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First year partner, received a $2,000 monthly guaranteed payment. Share of ordinary business income was $55,000. If his combined income and SE tax rate on his earned income is 30 percent, compute his after-tax cash flow from partnership assuming the following.

a. In addition to his guaranteed payments, Mr. Fallon received a $10,000 cash distribution from Jenkle.

b. In addition to his guaranteed payments, he received a $50,000 cash distribution from Jenkle.

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Solution Summary

Calculate the after-tax cash flows for a partner with distributions. The rationale is explained in the solution.

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Tax is calculated on guaranteed payments plus the ordinary income. Distributions are a reduction of ...

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