Nicholas, a 40% Partner in Nedeau Partnership, Gives One-Half of His

question 107

Multiple Choice

Nicholas, a 40% partner in Nedeau Partnership, gives one-half of his interest to his sister, Michelle. During the current year, Nicholas performs services for the partnership for which reasonable compensation is $80,000, but for which he accepts no pay. Nicholas and Michelle are each credited with a $100,000 distributive share, all of which is ordinary income. What are Nicholas' and Michelle's distributive share?

• A) \[\begin{array} { |l | l | }
• \hline \text { Nicholas } & \text { Michelle } \\
• \hline \$ 100,000 & \$ 100,000 \\
• \hline
• \end{array}\]
• B) \[\begin{array} { | l | l | }
• \hline \text { Nicholas } & \text { Michelle } \\
• \hline \$ 60,000 & \$ 60,000 \\
• \hline
• \end{array}\]
• C) \[\begin{array} { | l | l | }
• \hline \text { Nicholas } & \text { Michelle } \\
• \hline \$ 180,000 & \$ 100,000 \\
• \hline
• \end{array}\]
• D) \[\begin{array} { | l | l | }
• \hline \text { Nicholas } & \text { Michelle } \\
• \hline \$ 140,000 & \$ 60,000 \\
• \hline
• \end{array}\]

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