Reply to Yes, tiny violin - did anyone else struggle first years of law partnership?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]This is an equity partnership at top 50. All partners start at $800k. Retirement is around $70k, overhead around $130k. Monthly payout is around $20k. Draws about 55k, three times a year. Then end payout. Tax bills for quarterly payments about $80k, fed and state. That’s the gist of it. [/quote]

NP but even though the money is uneven you're getting 4 x $55K = $220K + $20K x 12 = $240K for a total of $460K per year gross right?  Don't you have savings from when you are an associate?  Why don't you just use that money to smooth out the lumps and then replenish your savings when you get your draws during the year and at the end of the year?[/quote]

We have to make quarterly tax payments from this also. It’s three times $55k, the final number isn’t settled yet, but the tax bill at the end of the year will be much higher. [/quote]

Got it, but the final number won't be 0 right?  I mean, you can probably safely assume it will be $40K right?  Also, you're paying taxes on $460K + 130K capital contribution so total taxable income will be $590K even though your actual gross is only $460K.  I think your estimated tax payments are incorrect as $80K per quarter implies an effective tax rate of over 50% ($320K tax payments vs. $590K gross).[/quote]

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