Alex,Ellen and Nicolas Are Equal Partners in a Local Restaurant

question 52

Multiple Choice

Alex,Ellen and Nicolas are equal partners in a local restaurant.The restaurant reports the following items for the current year: Each partner receives a Schedule K-1 with one-third of the preceding items reported to him/her.How must each individual report these results on his/her Form 1040?

• A) $100,000 income on Schedule E; $50,000 investment expense on Schedule A
• B) $257,667 income on Schedule E; $50,000 investment expense on Schedule A
• C) $300,000 income on Schedule E; $50,000 investment expense on Schedule A
• D) $300,000 income on Schedule E; $150,000 investment expense on Schedule A

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Definitions:

Amino Acids

Organic compounds that combine to form proteins and are used by the body to repair tissues and synthesize enzymes and hormones.

Glutamate

An amino acid that serves as a key neurotransmitter in the brain, involved in learning and memory.

Receptors

Sensory cells or structures in the body that respond to specific stimuli from the external or internal environment.

Cochlea

Coiled, fluid-filled structure in the inner ear that holds the mechanoreceptors involved in hearing.