Distributable Income – NBC Institute

TAX – May 2017 – L2 – SB – Q3 – Taxation of Partnerships and Sole Proprietorships

Computation of adjusted income and chargeable income for partners in a firm with adjustments for disallowable expenses.

Question

Muyiwa, Seyi, and Akpan are partners in an accounting firm in Lagos, Museak & Co (Chartered Accountants). The Statement of Profit or Loss for the year ended December 31, 2015, is shown below:

Additional Information:

Donation was for laying the foundation of a new church.
Repairs for Muyiwa’s wife’s vehicle, costing ₦550,000, were included under repairs and maintenance.
Medical expenses of ₦500,000 were incurred for flying a partner’s father-in-law abroad.
Akpan contributed ₦500,000 under the Pension Reforms Act 2004 (as amended).
Capital allowances agreed with the tax authority were ₦4,000,000.
Partners’ profit-sharing ratio: Muyiwa 6; Seyi 4; Akpan 2.

Required:

Compute the adjusted income of Museak & Co for tax purposes. (6 Marks)
Compute the chargeable income of each partner. (6 Marks)
Compute the tax payable by each partner. (8 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Adjusted Income, chargeable income, Distributable Income, Partnership Income
Level: Level 2

Topic: Taxation of Partnerships and Sole Proprietorships
Series: MAY 2017

TAX – May 2021 – L1 – SB – Q1 – Taxation of Trusts and Estates

Calculation of net distributable income of a trust and assessable income of beneficiaries.

Question

Chief Adio Jaiyesimi, a Chartered Accountant, died in London after a brief illness on June 10, 2015. He was survived by four children namely: Akeem; Ayodeji; Olabisi; and Adekunle. He created a trust for the benefits of his four children. The records of the trustee for the year ended December 31, 2020, have revealed the following:

Description	Amount (N)
Adjusted trading profits for the year ended December 31, 2020	36,400,000
Dividend (gross)	305,000
Rental income (gross)	820,000
Interest received (gross)	118,500
Sundry income	24,800

Additional information:
(i) Fixed annuity paid to Deji, his first child: 81,000
(ii) Fixed remuneration for the trustee: 500,000
(iii) Variable remuneration of the trustee – 5% of gross income: 56
(iv) Allowable expenses of the trustee as agreed: 60,000
(v) Capital allowances as agreed with the Revenue: 395,000
(vi) Discretionary payments were made by the trustee in agreement with the trust deed as follows:

Beneficiary	Amount (N)
Akeem	300,000
Ayodeji	250,000
Olabisi	220,000
Adekunle	180,000

(vii) One third of the distributable income is to be shared equally among the children.

Required:
a. Compute the net distributable income in the hands of the trustee. (13 Marks)
b. Compute the assessable income in the hands of each beneficiary. (7 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Beneficiaries, Capital allowances, Distributable Income, Taxation, Trusts
Level: Level 1

Topic: Taxation of Trusts and Estates
Series: MAY 2021

TAX – May 2017 – L2 – SB – Q3 – Taxation of Partnerships and Sole Proprietorships

Computation of adjusted income and chargeable income for partners in a firm with adjustments for disallowable expenses.

Question

Muyiwa, Seyi, and Akpan are partners in an accounting firm in Lagos, Museak & Co (Chartered Accountants). The Statement of Profit or Loss for the year ended December 31, 2015, is shown below:

Additional Information:

Donation was for laying the foundation of a new church.
Repairs for Muyiwa’s wife’s vehicle, costing ₦550,000, were included under repairs and maintenance.
Medical expenses of ₦500,000 were incurred for flying a partner’s father-in-law abroad.
Akpan contributed ₦500,000 under the Pension Reforms Act 2004 (as amended).
Capital allowances agreed with the tax authority were ₦4,000,000.
Partners’ profit-sharing ratio: Muyiwa 6; Seyi 4; Akpan 2.

Required:

Compute the adjusted income of Museak & Co for tax purposes. (6 Marks)
Compute the chargeable income of each partner. (6 Marks)
Compute the tax payable by each partner. (8 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Adjusted Income, chargeable income, Distributable Income, Partnership Income
Level: Level 2

Topic: Taxation of Partnerships and Sole Proprietorships
Series: MAY 2017

TAX – May 2021 – L1 – SB – Q1 – Taxation of Trusts and Estates

Calculation of net distributable income of a trust and assessable income of beneficiaries.

Question

Description	Amount (N)
Adjusted trading profits for the year ended December 31, 2020	36,400,000
Dividend (gross)	305,000
Rental income (gross)	820,000
Interest received (gross)	118,500
Sundry income	24,800

Beneficiary	Amount (N)
Akeem	300,000
Ayodeji	250,000
Olabisi	220,000
Adekunle	180,000

(vii) One third of the distributable income is to be shared equally among the children.

Required:
a. Compute the net distributable income in the hands of the trustee. (13 Marks)
b. Compute the assessable income in the hands of each beneficiary. (7 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Beneficiaries, Capital allowances, Distributable Income, Taxation, Trusts
Level: Level 1

Topic: Taxation of Trusts and Estates
Series: MAY 2021

Question Tag: Distributable Income

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TAX – May 2017 – L2 – SB – Q3 – Taxation of Partnerships and Sole Proprietorships

Computation of adjusted income and chargeable income for partners in a firm with adjustments for disallowable expenses.

Additional Information:

Required:

TAX – May 2021 – L1 – SB – Q1 – Taxation of Trusts and Estates

Calculation of net distributable income of a trust and assessable income of beneficiaries.

TAX – May 2017 – L2 – SB – Q3 – Taxation of Partnerships and Sole Proprietorships

Computation of adjusted income and chargeable income for partners in a firm with adjustments for disallowable expenses.

Additional Information:

Required:

TAX – May 2021 – L1 – SB – Q1 – Taxation of Trusts and Estates

Calculation of net distributable income of a trust and assessable income of beneficiaries.

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TAX – May 2017 – L2 – SB – Q3 – Taxation of Partnerships and Sole Proprietorships

Computation of adjusted income and chargeable income for partners in a firm with adjustments for disallowable expenses.

Additional Information:

Required:

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TAX – May 2021 – L1 – SB – Q1 – Taxation of Trusts and Estates

Calculation of net distributable income of a trust and assessable income of beneficiaries.

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TAX – May 2017 – L2 – SB – Q3 – Taxation of Partnerships and Sole Proprietorships

Computation of adjusted income and chargeable income for partners in a firm with adjustments for disallowable expenses.

Additional Information:

Required:

You're reporting an error for "TAX – May 2017 – L2 – SB – Q3 – Taxation of Partnerships and Sole Proprietorships"

TAX – May 2021 – L1 – SB – Q1 – Taxation of Trusts and Estates

Calculation of net distributable income of a trust and assessable income of beneficiaries.

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