Jan and Sue are general partners in CKY Bake Shop and share equally in profits and losses. They have no employees. They have the following

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Jan and Sue are general partners in CKY Bake Shop and share equally in profits and losses. They have no employees. They have the following income and expenses for the current tax year:

Gross receipts Guaranteed payment (Jan) Guaranteed payment (Sue) Rent for shop Interest paid on bank loan Utilities

This is a two-part question.

$60,000 $15,000 $15,000 $12,000 $ 400 $ 4,000

Supplies Depreciation Insurance Telephones Charitable contribution

$4,000 $ 800 $ 450 $3,000 $ 200

Question 1: What is the ordinary business income (loss) for CKY during the current tax year? Question 2: How much self-employment earnings should each partner report on her personal

tax return?

a) $ 5,150; $ 2,575 b) $ 5,350; $17,675 c) $35,350; $ 2,675 d) $ 5,150; $17,575