Question 1

Section B - Case 2 (GreenRoots LLP)

GreenRoots LLP has two partners, Sarah and Tom. For the year ended 31 December 2023, the partnership's tax-adjusted trading profit is £120,000. Sarah receives an annual salary of £20,000. The remaining profits are split equally (50:50).

What is Tom's share of the trading profit for tax purposes?

Accepted Answer

Deduct the partner salaries from the total profit first. Then divide the remaining profit according to the profit-sharing ratio.

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Deducting the salary as an expense before calculating tax-adjusted profit, or giving Tom half of the gross £120,000.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA TX — Taxation Practice Exam 2

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