Kim Received a One-Third Profits and Capital Interest in Bright

question 125

Multiple Choice

Kim received a one-third profits and capital interest in Bright Line, LLC, in exchange for legal services she provided. In addition to her share of partnership profits or losses, she receives a $30,000 guaranteed payment each year for ongoing services she provides to the LLC. For X4, Bright Line reported the following revenues and expenses: sales-$150,000, cost of goods sold-$90,000, depreciation expense-$45,000, long-term capital gains-$15,000, qualified dividends-$6,000, and municipal bond interest-$3,000. How much ordinary business income (loss) will Bright Line allocate to Kim on her Schedule K-1 for X4?

• A)($15,000)
• B)$6,000
• C)$9,000
• D)$15,000
• E)None of the choices will be reported as ordinary business income (loss)on Schedule K-1.

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Definitions:

Neuron

A specialized cell transmitting nerve impulses; a nerve cell, consisting of a cell body, dendrites, and an axon.

Spinal Cord

A long, thin, tubular bundle of nervous tissue and support cells that extends from the brain, the major conduit for information traveling between the brain and the rest of the body.

Neuron

A specialized cell transmitting nerve impulses; a nerve cell, which is the fundamental unit of the nervous system enabling communication throughout the body.

Nervous System

A complex network of nerves and cells that transmit signals between different parts of the body.