Becca Franklin and Suzanne Peterson Formed an LLC as Co-Owners

question 66

Multiple Choice

Becca Franklin and Suzanne Peterson formed an LLC as co-owners and managers.The LLC made $275,000 after expenses last year.There are no provisions in their operating agreement on how profits are to be split.​
-What amount would Becca declare on her income tax returnif Becca and Suzanne had formed a general partnership and there was no provision in their partnership agreement on how profits are to be split?

• A)​$137,500
• B)​the full $275,000
• C)nothing, because thegeneral partnershipreports that income and pays the taxes
• D)thegeneral partnershipmust retain at least half of the $275,000 and Becca reports half of $137,500

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Definitions:

Creditors

Individuals or institutions to whom money is owed by a debtor or borrower.

Business

Organizational entities that are involved in the trade of goods, services, or both to consumers, with the primary purpose of earning profits.

Owners' Equity

The residual interest in the assets of an entity after deducting liabilities, essentially the net worth belonging to the owners.

Assets

Resources with economic value that an individual, corporation, or country owns or controls with the expectation that it will provide future benefit.