Question
J is a one-fourth partner in JKLM Partnership. The partnership has gross sales of $880,000, cost of sales of $540,000, and operating expenses excluding payments
J is a one-fourth partner in JKLM Partnership. The partnership has gross sales of $880,000, cost of sales of $540,000, and operating expenses excluding payments to partners of $145,000 for the current calendar year. Partners compensation for services of $90,000 ($45,000 to J) were paid, and distributions of $120,000 ($30,000 to J) were made this year.
a.) Determine the partnerships net income for tax reporting purposes.
b.) Determine the amount of income J must report from the partnership for the year.
c.) Determine how much of the income in (b) is self-employment income.
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