Question

Based only on the example provided, fil out the form below with the ordinary income and the three items that must be reported separately

[6] For the current year, the Murray and Parker Partnership had book income of $100,000, which included the following: Long-term capital gain $7,000 Sec. 1231 loss (3.000) Dividends 200 Interest paid to partners for use of capital 12,000 The partners share profits and losses equally. What amount of partnership income (excluding all partnership items which must be reported separately) should each partner report in his or her individual income tax return for the current year? A. $47,900 B. $48,000 C. $50,000 D. $53,900 The correct answer is A. A. A partnership's ordinary income is the portion of taxable income not required to be stated separately (Sec. 702(a)(8)]. The interest paid to partners is a guaranteed payment which results in an ordinary deduction, Book income may be adjusted to ordinary income by excluding all items of income and adding back all deduction and loss items, which must be separately stated. The partnership's ordinary income is Book income $100,000 Add back: Sec. 1231 loss 3,000 Subtract: Long-term capital gain (7.000) Dividends (200) Partnership ordinary income $ 95,800 Because the partners share profits and losses equally, each partner's share of partnership income is $47,900 (595,800 x 50%).

Answer 1

For both the partners:

6 5 Doc1.pdf X + v - 0 x € file:///C:/Users/Lenovo/Documents/Doc1.pdf 7 0 of lo 1 - + Add notes Fit to page ID Page view AV Read aloud DPHUSUT Part III Partner's Share of Current Year Income, Deductions, Credits, and Other Items 1 Ordinary business income foss) 15 Credits $ 47900 2 Net rental real estate income (loss) Schedule K-1 20 9 (Form 1065) Department of the Treasury Internal Revenue Service For calendar year 2019, or tax year beginning 2019 ending Partner's Share of income, Deductions, Credits, etc. See back of form and separato instructions. | Part Information About the Partnership A Partnership's employer identification number Murray and Parker Partnership B Partnership's name, address, city, state, and ZIP code 3 Other net rental income (loss) 16 Foreign transactions 4a Guaranteed payments for services 4b Guaranteed payments for capital 4c Total guaranteed payments 5 Interest income C 6a IRS Center where partnership filed return D D Check if this is a publicly traded partnership (PTP) Part II Information About the Partner E Partner's SSN or TIN (Do not use TIN of a disregarded entity. See inst.) Ordinary dividends 100 Qualified dividends 6b 6c Dividend equivalents 17 Alternative minimum tax (AMT) Items F Name, address, city, state, and ZIP code for partner entered in E. See instructions. Murray 7 Royalties 9a 18 Tax-exempt income and nondeductible expenses G General partner or LLC Limited partner or other LLC member-manager member Domestic partner Foreign partner H2 U if the partner is a disregarded entity (DE), enter the partner's: TIN Name What type of entity is this partner? 12 If this partner is a retirement plan (IRA/SEP/Keogh/etc.), check here Dewi Net long-term capital gain (loss) 3500 Collectibles (28%) gain (loss) 9b Activate Windows Go Settings to activate Windows 9c Unrecaptured section 1250 gain 14:11 Type here to search o e @ < 9 w A s a 10) ENG 20-01-2020 F5

6 5 BE Doc2.pdf X + V - x € Doc1.pdf → 0 oft lo 0 file:///C:/Users/Lenovo/Documents/Doc2.pdf — + Fit to page ID Page view AV Read aloud Add notes F 9b Collectibles (28%) gain (loss) 9c Unrecaptured section 1250 gain 12 J TIN Name What type of entity is this partner? If this partner is a retirement plan (IRA/SEP/Keogh/etc.), check here U . Partner's share of profit, loss, and capital (see instructions): Beginning Ending Profit 50 % 50 % Loss 50 % 50 % Capital 50 % 50 % Check if decrease is due to sale or exchange of partnership interest. U 10 Net section 1231 gain loss (1500) beter micro USS 19 Distributions 11 20 Other information K 12 Section 179 deduction 13 Other deductions Partner's share of liabilities: Beginning Ending Nonrecourse . . $ Qualified nonrecourse financing S Recourse . $ O Check this box if Item k includes liability amounts from lower tier partnerships. Partner's Capital Account Analysis 14 Self-employment earnings (loss) Beginning capital account . . $ Capital contributed during the year. $_ Current year net income (loss). . $ Other increase (decrease) (attach explanation) $ Withdrawals & distributions : $ Ending capital account. . . $ 21 D More than one activity for at-risk purposes 22 D More than one activity for passive activity purposes See attached statement for additional information. M Did the partner contribute property with a built-in gain or loss? O Yos O No f "Yes," attach statement. See instructions. Partner's Share of Not Unrecognized Section 704(c) Gain or (Loss) Beginning . . . . . . . . $ Ending . . . . . . . . . $ For IRS Use Only Activate Windows Go to Settings to activate Windows. Type here to search o e Ô X 9 W 14:12 ^ or 1>) ENG 20-01-20205