Please provide clear instructions Amit is a partner in Reynolds Partnership. Thi

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Please provide clear instructions

Amit is a partner in Reynolds Partnership. This year, Amit's Schedule K-1 from Reynolds reflected $50,000 of ordinary income, $1,000 of interest income, and a cash distribution of $35,000. Amit's marginal tax rate is 37 percent. Amit qualifies for the Section 199A deduction, without regard to the wage limitation. a. Calculate the tax cost of Amit's partnership earnings this year. Answer is complete but not entirely correct. Tax cost $ 5,920 b. Calculate Amit's after-tax cash flow from his partnership activity this year. After-tax cash flow

Explanation / Answer

Calculation of income tax Particulars Amount ordinary business income 50000 interest income 1000 taxable income 51000 less : Deduction u/s 199A 20% 10200 marginal rate of tax 37% income tax 3774 Tax after cash flow from partnership activity cash distribution 35000 income tax 3774 after tax cash flow 31226 hence after sale cash flow of A from his partnership activity is $ 31226

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