Demarcus Is a 50% Partner in the DJ Partnership

question 67

Multiple Choice

Demarcus is a 50% partner in the DJ partnership. DJ has taxable income for the year of $200,000. Demarcus received a $75,000 distribution from the partnership. What amount of income related to DJ must Demarcus recognize?

• A)$200,000
• B)$75,000
• C)$100,000
• D)$37,500

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Definitions:

Cost of Equity

The cost of equity is the return that a company is expected to pay to its shareholders for their investment in the company's equity.

Flotation Costs

Expenses incurred by a company when it issues new securities, including fees to underwriters, legal fees, and registration fees.

WACC

The Weighted Average Cost of Capital (WACC) is a calculation of a firm's cost of capital, where each category of capital is proportionately weighted.

Tax Rates

The percentage at which an individual or corporation is taxed, which can vary based on the taxable amount or income.