Matt and Joel Are Equal Partners in the MJ Partnership

question 110

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

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Definitions:

Narrow View

A limited perspective that does not consider all aspects or possibilities, often focusing tightly on a single point or idea.

Individual Behavior

Actions and conduct exhibited by a person, influenced by individual attitudes, personality traits, and perceptions.

Stock Options

Financial derivatives that give the holder the right, but not the obligation, to buy or sell shares of a company at a specified price within a set time frame.

Granting Stock

The process by which a company offers shares of its stock to employees as part of their compensation package or as a reward.