2018 Tax Year

Abe, Sam & Larry formed the ASL Partnership, agreeing to share profits and losses equally. Larry will manage the business for which he will receive a guaranteed payment of $30,000 per year. Cash receipts and disbursements for the year were as follows:

Net income from operations (before guaranteed payment) $ 90,000

Guaranteed payment to Larry 30,000

What is Larrys share of the partnerships ordinary income and guaranteed payment?

Select one:

a. Ordinary income, $30,000; Guaranteed payment, $10,000

b. Ordinary income, $20,000; Guaranteed payment, $10,000

c. Ordinary income, $30,000; Guaranteed payment, $30,000

d. Ordinary income, $20,000; Guaranteed payment, $30,000