Den and Carr are partners in the Den-Carr Pa nership. Under the terms of the partnership agreement, Den is to receive 25% of all partnership income or loss plus a guaranteed payment of $80,000 per year. In the current tax year, Den-Carr had $72,000 of ordinary income before any deduction for Den's payment. What income (loss) will Den report on his current-year tax return assuming he materially pa icipates in partnership activities?

A. $18,000 ordinary income; $80,000 guaranteed payment.

8. $18,000 ordinary income; $62,000 guaranteed payment.

C. $80,000 guaranteed payment.

D. $80,000 guaranteed payment; $2,000 ordinary loss.

L, M, and N formed an equal general partnership in January of the current year, each contributing $1,000 cash and each actively participating in the business. Although the partnership is engaged in real estate rental activities, it does not qualify as a real property trade or business. The partnership uses the cash method of accounting. The partnership purchased real property for $100,000, paying $3,000 in cash and giving a $97,000 nonrecourse note for which none of the pa ners is personally liable and which is not qualified real estate nonrecourse financing. The partnership incurred an operating loss of $15,000 for the year. Each partner has adjusted gross income from other activities of approximately $75,000 and no other passive losses. What is each pa ner's deductible share of the loss?

A. $0

B. $1,000

C. $4,000

D. $5,000