Rhonda Has a 30% Interest in the Capital and Profits

question 111

True/False

Rhonda has a 30% interest in the capital and profits of the ABC Partnership. In the first year of the partnership, 2018, it earned $150,000. However, the partners agreed that nothing would be distributed until after the end of March 2019, before Rhonda filed her 2018 tax return. The distributions were to be delayed because it was unclear as to whether business conditions would remain good in 2019. Things were going well in 2019 and therefore the partnership distributed $30,000 to Rhonda at the end of March, as a portion of her share of the partnership's 2018 earnings. The partnership's income for 2019 was $60,000. As a result, Rhonda must recognize $30,000 of gross income in 2018 and $18,000 in 2019.

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Definitions:

Foreign Aid

Economic, military, or technical assistance given by one nation to another for purposes of relief and rehabilitation, economic stabilization, or mutual defense.

Sanctions

Measures taken by countries or international bodies to punish or restrict other nations in order to effect change in their behavior, typically for political, military, or economic reasons.

Economic

Refers to the science that studies how goods and services are produced, distributed, and consumed.

Economic Assistance

Financial aid provided by countries or international institutions to support the economic development and welfare of disadvantaged regions or countries.