The partnership agreement of the G&P general partnership states that Gary will receive a guaranteed payment of $13,000, and that Gary and Prudence will share the remaining profits or losses in a 45/55 ratio. For year 1, the G&P partnership reports the following results:

Sales revenue ....................................................... $70,000

Gain on sale of land (§ 1231).................................. $8,000

Cost of goods sold................................................ ($38,000)

Depreciation - MACRS........................................... ($9,000)

Employee wages.................................................. ($14,000)

Cash charitable contributions............................... ($3,000)

Municipal bond interest........................................... $2,000

Other expenses........................................................ ($2,000)

a. Compute Gary's share of ordinary income (loss) and separately stated items to be reported on his year 1 Schedule K-1, including his self-employment income (loss).

b. Compute Gary's share of self-employment income (loss) to be reported on his year 1 Schedule K-1, assuming G&P is a limited partnership and Gary is a limited partner.

c. What do you believe Gary's share of self-employment income (loss) to be reported on his year 1 Schedule K-1 should be, assuming G&P is an LLC and Gary spends 2,000 hours per year working there full time?