Question
provide an explanation of the correct answer and why the other choices are incorrect. 1) Nick, Chris, Stacey, and Mike are each 25% partners in
provide an explanation of the correct answer and why the other choices are incorrect.
1) Nick, Chris, Stacey, and Mike are each 25% partners in Liberty Partnership, a general partnership. During the current year, the partnership had revenues of $300,000 and non-separately allocated business expenses of $100,000, including a guaranteed payment of $30,000 to Nick for services rendered. Also, during the current year, the partnership had interest income of $10,000 and charitable contributions of $16,000.
With regard to activity in the partnership, what should Stacey report on her income tax return for the current year?
Ordinary Income Interest Income Charitable Contributions
a) $200,000 $10,000 $16,000
b) 80,000 2,500 4,000
c) 57,500 2,500 4,000
d) 50,000 2,500 4,000
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