Partnership Income – NBC Institute

TAX – May 2015 – L2 – SB – Q4 – Taxation of Partnerships and Sole Proprietorships

Calculate the chargeable income of each partner before and after the admission of a new partner and determine the basis period.

Question

The Managing Partner of Aarinola Sunkanmi & Co., a firm of Estate Surveyors and Valuers based in Lagos, has invited you to calculate the Chargeable income of each of the firm’s partners after the admission of Mariam in 2014.

The information relating to the Partnership are as follows:

(a) The firm makes up its accounts up to 31 December of each year.

(b) Extracts from the books of account for the year ended 31 December 2014, are listed below:

Description	Amount (₦)
Net profit for the year	1,380,000
Depreciation	450,000
Capital Allowances for the year	366,300
Balancing Allowance	72,500
Balancing Charge	75,480
Profit on sale of fixed assets	77,500
Legal expenses for successfully defending one of the partners for professional misconduct	14,000

(i) The THREE partners are Aarinola, Olasunkanmi and Murphiefe.

(ii) Profit sharing ratio is as follows:

Aarinola: 2
Olasunkanmi: 1
Murphiefe: 1

(iii) Aarinola and Murphiefe received ₦15,000 each as interest on loan per annum.

(iv) Salaries paid to each partner are as follows:

Aarinola: ₦140,000 per annum
Olasunkanmi: ₦60,000 per annum
Murphiefe: ₦60,000 per annum

(v) Olasunkanmi ceased to be a partner on 30 June 2014. Mariam was admitted on 1 July 2014. Mariam’s salary was fixed at ₦60,000 per annum. She also received interest on capital of ₦10,000 per annum.

(vi) Included in travelling expenses is the sum of ₦12,000 paid towards the annual vacation of Aarinola, the Principal Partner.

(vii) On Mariam’s admission in July 2014, the profit sharing ratio was changed to:

Aarinola: 10
Murphiefe: 7
Mariam: 3

Required:

a. Compute the Chargeable Income of each partner: i. Prior to admission of Mariam (9 Marks)
ii. Post-admission of Mariam (9 Marks)

b. State the basis period for the existing partners. (2 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Basis Period, Capital allowances, chargeable income, Partnership Changes, Partnership Income, Profit Sharing
Level: Level 2

Topic: Taxation of Partnerships and Sole Proprietorships
Series: MAY 2015

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 2023 – L2 – SA – Q1 – Personal Income Tax (PIT)

Compute partnership income and individual partner tax liabilities.

Question

Fadeke, Femi, Kola, and Gbenga have been in partnership as medical practitioners for eight years. The statement of profit or loss for the year ended December 31, 2021, is as follows:

Capital allowances agreed with the revenue: N980,000
Profits are to be shared equally among the partners.
Fadeke and Femi are married with three and two children, respectively.
Fadeke has a life assurance policy of N960,000 on which she pays N96,000 annually as a premium.
Fadeke maintains her aged father who is over 68 years.

Required:

a. Compute the income of the partnership. (5 Marks)
b. Compute the income tax liability of each of the partners. (25 Marks)
(Total: 30 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Allowable Deductions, Computed Income, Income Tax, Partnership Income
Level: Level 2

Topic: Personal Income Tax
Series: MAY 2023

PT – Aug 2022 – L2 – Q3b – Income Tax Liabilities

Compute the chargeable incoPartnership Income, Chargeable Income, Capital Allowanceme for three partners for the years 2018, 2019, and 2020.

Question

Elorm and Eyram entered into a partnership on 1 January 2018 to produce hair products. They agreed to share profit and losses equally after charging:

Annual Salaries: Elorm: GH¢10,000,000, Eyram: GH¢14,000,000.
Interest on capital of 5% p.a. was deducted from the profit.
Depreciation deducted from the profits for the various years of assessment were GH¢80,000 (2018), GH¢60,000 (2019), and GH¢180,000 (2020).
Capital contributed by the partners: Elorm: GH¢100,000,000, Eyram: GH¢80,000,000.
To introduce a new product, they invited Elinam to join the partnership on 1 January 2019. Elinam was to receive a salary of GH¢6,000,000 annually in addition to an equal share of profit. He will not be entitled to interest on his capital of GH¢60,000,000.
Elorm resigned as a partner on 30 June 2020 after being elected as a Member of Parliament.
Operational profit/loss of the partnership: GH¢500,000,000 (2018), GH¢(180,000,000) (2019), GH¢1,000,000,000 (2020).
Capital allowance of GH¢60,000 has been granted by Ghana Revenue Authority for each year of assessment.

Required:
Compute the chargeable income of Elorm, Eyram, and Elinam for the 2018, 2019, and 2020 years of assessment. (14 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Allowance, chargeable income, Partnership Income
Level: Level 2

Topic: Income Tax Liabilities
Series: AUG 2022

TAX – May 2015 – L2 – SB – Q4 – Taxation of Partnerships and Sole Proprietorships

Calculate the chargeable income of each partner before and after the admission of a new partner and determine the basis period.

Question

The information relating to the Partnership are as follows:

(a) The firm makes up its accounts up to 31 December of each year.

(b) Extracts from the books of account for the year ended 31 December 2014, are listed below:

Description	Amount (₦)
Net profit for the year	1,380,000
Depreciation	450,000
Capital Allowances for the year	366,300
Balancing Allowance	72,500
Balancing Charge	75,480
Profit on sale of fixed assets	77,500
Legal expenses for successfully defending one of the partners for professional misconduct	14,000

(i) The THREE partners are Aarinola, Olasunkanmi and Murphiefe.

(ii) Profit sharing ratio is as follows:

Aarinola: 2
Olasunkanmi: 1
Murphiefe: 1

(iii) Aarinola and Murphiefe received ₦15,000 each as interest on loan per annum.

(iv) Salaries paid to each partner are as follows:

Aarinola: ₦140,000 per annum
Olasunkanmi: ₦60,000 per annum
Murphiefe: ₦60,000 per annum

(vi) Included in travelling expenses is the sum of ₦12,000 paid towards the annual vacation of Aarinola, the Principal Partner.

(vii) On Mariam’s admission in July 2014, the profit sharing ratio was changed to:

Aarinola: 10
Murphiefe: 7
Mariam: 3

Required:

a. Compute the Chargeable Income of each partner: i. Prior to admission of Mariam (9 Marks)
ii. Post-admission of Mariam (9 Marks)

b. State the basis period for the existing partners. (2 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Basis Period, Capital allowances, chargeable income, Partnership Changes, Partnership Income, Profit Sharing
Level: Level 2

Topic: Taxation of Partnerships and Sole Proprietorships
Series: MAY 2015

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 2023 – L2 – SA – Q1 – Personal Income Tax (PIT)

Compute partnership income and individual partner tax liabilities.

Question

Fadeke, Femi, Kola, and Gbenga have been in partnership as medical practitioners for eight years. The statement of profit or loss for the year ended December 31, 2021, is as follows:

Capital allowances agreed with the revenue: N980,000
Profits are to be shared equally among the partners.
Fadeke and Femi are married with three and two children, respectively.
Fadeke has a life assurance policy of N960,000 on which she pays N96,000 annually as a premium.
Fadeke maintains her aged father who is over 68 years.

Required:

a. Compute the income of the partnership. (5 Marks)
b. Compute the income tax liability of each of the partners. (25 Marks)
(Total: 30 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Allowable Deductions, Computed Income, Income Tax, Partnership Income
Level: Level 2

Topic: Personal Income Tax
Series: MAY 2023

PT – Aug 2022 – L2 – Q3b – Income Tax Liabilities

Compute the chargeable incoPartnership Income, Chargeable Income, Capital Allowanceme for three partners for the years 2018, 2019, and 2020.

Question

Elorm and Eyram entered into a partnership on 1 January 2018 to produce hair products. They agreed to share profit and losses equally after charging:

Annual Salaries: Elorm: GH¢10,000,000, Eyram: GH¢14,000,000.
Interest on capital of 5% p.a. was deducted from the profit.
Depreciation deducted from the profits for the various years of assessment were GH¢80,000 (2018), GH¢60,000 (2019), and GH¢180,000 (2020).
Capital contributed by the partners: Elorm: GH¢100,000,000, Eyram: GH¢80,000,000.
To introduce a new product, they invited Elinam to join the partnership on 1 January 2019. Elinam was to receive a salary of GH¢6,000,000 annually in addition to an equal share of profit. He will not be entitled to interest on his capital of GH¢60,000,000.
Elorm resigned as a partner on 30 June 2020 after being elected as a Member of Parliament.
Operational profit/loss of the partnership: GH¢500,000,000 (2018), GH¢(180,000,000) (2019), GH¢1,000,000,000 (2020).
Capital allowance of GH¢60,000 has been granted by Ghana Revenue Authority for each year of assessment.

Required:
Compute the chargeable income of Elorm, Eyram, and Elinam for the 2018, 2019, and 2020 years of assessment. (14 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital Allowance, chargeable income, Partnership Income
Level: Level 2

Topic: Income Tax Liabilities
Series: AUG 2022

Question Tag: Partnership Income

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TAX – May 2015 – L2 – SB – Q4 – Taxation of Partnerships and Sole Proprietorships

Calculate the chargeable income of each partner before and after the admission of a new partner and determine the basis period.

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 2023 – L2 – SA – Q1 – Personal Income Tax (PIT)

Compute partnership income and individual partner tax liabilities.

PT – Aug 2022 – L2 – Q3b – Income Tax Liabilities

Compute the chargeable incoPartnership Income, Chargeable Income, Capital Allowanceme for three partners for the years 2018, 2019, and 2020.

TAX – May 2015 – L2 – SB – Q4 – Taxation of Partnerships and Sole Proprietorships

Calculate the chargeable income of each partner before and after the admission of a new partner and determine the basis period.

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 2023 – L2 – SA – Q1 – Personal Income Tax (PIT)

Compute partnership income and individual partner tax liabilities.

PT – Aug 2022 – L2 – Q3b – Income Tax Liabilities

Compute the chargeable incoPartnership Income, Chargeable Income, Capital Allowanceme for three partners for the years 2018, 2019, and 2020.

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TAX – May 2015 – L2 – SB – Q4 – Taxation of Partnerships and Sole Proprietorships

Calculate the chargeable income of each partner before and after the admission of a new partner and determine the basis period.

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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 2023 – L2 – SA – Q1 – Personal Income Tax (PIT)

Compute partnership income and individual partner tax liabilities.

You're reporting an error for "TAX – May 2023 – L2 – SA – Q1 – Personal Income Tax (PIT)"

PT – Aug 2022 – L2 – Q3b – Income Tax Liabilities

Compute the chargeable incoPartnership Income, Chargeable Income, Capital Allowanceme for three partners for the years 2018, 2019, and 2020.

You're reporting an error for "PT – Aug 2022 – L2 – Q3b – Income Tax Liabilities"

TAX – May 2015 – L2 – SB – Q4 – Taxation of Partnerships and Sole Proprietorships

Calculate the chargeable income of each partner before and after the admission of a new partner and determine the basis period.

You're reporting an error for "TAX – May 2015 – L2 – SB – Q4 – Taxation of Partnerships and Sole Proprietorships"

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 2023 – L2 – SA – Q1 – Personal Income Tax (PIT)

Compute partnership income and individual partner tax liabilities.

You're reporting an error for "TAX – May 2023 – L2 – SA – Q1 – Personal Income Tax (PIT)"

PT – Aug 2022 – L2 – Q3b – Income Tax Liabilities

Compute the chargeable incoPartnership Income, Chargeable Income, Capital Allowanceme for three partners for the years 2018, 2019, and 2020.

You're reporting an error for "PT – Aug 2022 – L2 – Q3b – Income Tax Liabilities"

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