Charlene is an equal partner in the CD Partnership. The partnership does not qualify as a small business under the $27 million gross receipts test. The partnership incurred the following items for the current year. Ignore the deduction for one-half of self-employment tax.

Charlene is married and files a joint tax return, has no other sources of income, and claims the standard deduction. Calculate the partnership’s ordinary income for the current year and Charlene’s taxable income.

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Gross receipts Minus: Cost of goods sold Gross profit General business expenses Salary expense (W-2 wages) Depreciation expense Interest expense $ 30,000,000 (21,000,000) $ 9,000,000 2,400,000 1,600,000 1,000,000 2,000,000