Matt and Joel Are Equal Partners in the MJ Partnership

question 73

Multiple Choice

Matt and Joel are equal partners in the MJ Partnership. For the current year ended December 31, the partnership has book income of $80,000, which includes the following deductions: (1) guaranteed payments (salaries) to partners: Matt, $35,000; and Joel, $25,000; and (2) charitable contributions, $6,000. The book income amount does not include any sales of capital assets or Sec. 1231 assets or any tax- exempt income. Based on the above information, what amount should be reported as ordinary income on the partnership return?

• A) $80,000
• B) $140,000
• C) $86,000
• D) $60,000

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Definitions:

Usage

Refers to the consumption or allocation of resources, often related to utilities, software, services, or raw materials in a business context.

Capital Expenditures

Capital expenditures refer to funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment.

Plant Asset

Long-term tangible assets that are used in the production of goods or services and are not intended for resale.

Productive

Characterized by achieving significant results or output relative to the input or effort expended.