Sandi and Jodie are partners who operate Household Humanities. Sandi owns 60% and Jodie owns 40% of Household. During the current year, Household has the following results:
|
Revenues
|
$165,000
|
|
Operating expenses
|
45,000
|
|
Sandi's salary
|
50,000
|
|
Jodie's salary
|
45,000
|
|
Municipal bond interest income
|
3,000
|
|
Long-term capital loss
|
30,000
|
|
Charitable contributions
|
10,000
|
a. How must Household report these results to Sandi and Jodie? Show calculations.
b. Sandi is a head of household with two dependent children (ages 17 and 18). She has $19,000 of other income, which includes a $6,000 short-term capital gain. Sandi has $16,750 of other allowable itemized deductions. Calculate Sandi's taxable income and income tax liability.