Jim, Liz, and Keith are equal partners in the JLK Partnership, which uses the accrual method of accounting. All three materially participate in the business. JLK reports financial accounting income of $186,000 for the current year. The partnership used the following information to determine financial accounting income.

The following additional information is available about the current year€™s activities.
€¢ The partnership received a $1,000 prepayment of rent for next year but has not recorded it as income for financial accounting purposes.
€¢ The partnership recorded the land for financial accounting purposes at $15,000.
€¢ MACRS depreciation on the rental real estate and machinery and equipment were $12,000 and $29,000, respectively, in the current year.
€¢ MACRS depreciation for the rental real estate includes depreciation on the low-income housing expenditures.
a. What is JLK€™s financial accounting income?
b. What is JLK€™s partnership taxable income? 
c. What is JLK€™s ordinary income (loss)?
d. What are JLK€™s separately stated items?

Transcribed Image Text:

Operating profit (excluding the items listed below) S94,000 Rental income 30,000 Interest income Municipal bonds (tax-exempt) 15,000 Corporate bonds 3,000 Dividend income (all from less-than-20%-owned domestic corporations) 20,000 Gains and losses on property sales Gain on sale of iand held as an investment (contributed by Jim six years ago when its basis was $9,000 and its FMV was 60,000 S15,000) Long-term capital gains 10,000 Short-term capital losses 7,000 Sec. 1231 gain 9,000 Unrec aptured Sec. 1250 gairn 44,000 Depreciation: Rental real estate 12,000 Machinery and equipment 27,000 Interest expense related to: Mortgages on rental property 18,000 Loans to acquire municipal bonds 5,000 Guaranteed payments to Jim 30,000 Low-income housing expenditures qualifying for credit 21,000