Nate Is a Partner in a Partnership That Received $5,000

question 138

Multiple Choice

Nate is a partner in a partnership that received $5,000 of interest income this year. Nate's share of the interest is $1,000, and he should report this income on his individual return as:

• A)business income.
• B)income from a partnership.
• C)interest income.
• D)dividend income because the partnership intends to organize next year as a limited liability company.
• E)None of the choices are correct.

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Definitions:

Perfect Square Trinomial

A trinomial that can be factored into two identical binomials, resulting from squaring a binomial.

Simple Interest

A way of calculating interest where the amount earned or paid is proportional to the initial sum invested or borrowed and the rate of interest.

Principal

The original sum of money borrowed in a loan or put into an investment, not including profits or interest.

Sum Of Cubes

A special algebraic formula or identity that expresses the sum of two cubes in terms of a product of a binomial and a trinomial.