Final Answer:
Rochelle's net impact on taxable income in 2022, considering the partnership items reported on her K-1, amounts to a taxable income increase of $38,415 ($39,600 - $3,100 - $2,085). At a marginal tax rate of 35 percent, her tax liability due to this income is approximately $13,447.25 ($38,415 * 0.35). Considering the cash distribution of $6,300, her after-tax cash flow from the Megawatt Partnership for 2022 will be $22,852.75 ($6,300 - $13,447.25).
Step-by-step explanation:
The partnership items on Rochelle's K-1 include ordinary income of $39,600, Section 1231 loss of $3,100, and nondeductible expenses of $2,085. The net impact on her taxable income can be calculated by subtracting the Section 1231 loss and nondeductible expenses from the ordinary income: $39,600 - $3,100 - $2,085 = $38,415. This represents the taxable income increase attributed to her partnership interest.
Rochelle's tax liability resulting from this taxable income is determined by multiplying it by her marginal tax rate. With a marginal tax rate of 35 percent, her tax due on the increased taxable income amounts to approximately $13,447.25 ($38,415 * 0.35).
Considering the cash distribution of $6,300, Rochelle's after-tax cash flow from her interest in the Megawatt Partnership for the year 2022 can be calculated by subtracting the tax liability from the cash distribution: $6,300 - $13,447.25 = $22,852.75. This amount represents the cash flow she will receive after accounting for her tax obligation due to the partnership's income."