Partnership Operations and Partner tax liability. Michael and Kristina are equal partners in MK Partnership, a small business management consulting company operating in Orlando, Florida. Michael received a guaranteed payment of $55,000 and Kristina received a guaranteed payment of $60,000 for the services they provide to the partnership. They also each received a $10,000 distribution. The following information is taken from the partnerships books for 2017. MK keeps its books on a cash basis and it is also a cash basis taxpayer. Account Debit Credit Accounting & legal fees 5,200 Advertising 7,200 Consulting revenues 370,000 Contributions to qualified charities 22,000 Depreciation expense (straight line used for book purposes) 7,000 Dividend revenue (10% ownership) 14,000 Distributions to partners 20,000 Insurance premiums (property and liability) 12,200 Interest expense (mortgage) 4,000 Interest income ABC corporate bonds 3,500 Interest income Orange County bonds 1,500 Key-man life insurance premiums 3,000 Long-term capital gain (on sale of stock) 12,000 Meals and entertainment 16,000 Office rent 28,000 Salary expense other employees 55,000 Guaranteed Payment Partners 115,000 Short-term capital loss (on sale of stock) 4,500 Taxes (payroll) 4,208 Taxes (property) 1,000 Utilities 6,500 Additional information: MACRS (used for tax purposes) 25,000 Net Increase in Partnership Liabilities 20,000 Partnership Basis at 1/1/2017 Michael $40,000 Kristina $60,000 Required: [a] Determine MKs ordinary income and separately stated items. [b] Compute Kristinas basis in her partnership interest at 12/31/2017. [c] Assume Kristina is single with no dependents and has no other income or deduction items other than those from MK Partnership. Compute her 2017 tax liability (federal income tax and self-employment tax).