Anne Rose and Ellen Fenny carry on a partnership together. Gross receipts for the 2019-20 tax year are $80,000 Expenses included: purchases of trading stock $18,000, wages paid to employees $10,000, and the lease on the car used in the business. The car travelled 4,000 kilometres for business use and the partnership didn't keep a log book for the car. Stock on hand at the start of the year was $3,000 and at year end $3,400.
Anne will receive 75% and Ellen 25% of the net partnership income.
What is Anne's assessable income?

Question

Quizplus · Accepted Answer

To calculate Anne's assessable income, first determine the net partnership income. Gross receipts are $80,000. Expenses are: trading stock purchases ($18,000), wages ($10,000), and changes in stock on hand (end $3,400 - start $3,000 = $400 increase, reducing expenses). Total expenses = $18,000 + $10,000 + $400 = $28,400. Net income = $80,000 - $28,400 = $51,600. Anne's share is 75% of $51,600 = $38,700. The car lease expense is not included in the calculation as there's no provided amount, and the question focuses on the given expenses and stock adjustments.

Anne Rose and Ellen Fenny Carry on a Partnership Together