Glen and Michael Are Equal Partners in Trout Enterprises,a Calendar

question 101

Multiple Choice

Glen and Michael are equal partners in Trout Enterprises,a calendar year partnership.During the year,Trout Enterprises had gross income of $500,000 and operating expenses of $270,000.In addition,the partnership sold land that had been held for investment purposes for a long-term capital gain of $120,000.During the year,Glen withdrew $50,000 from the partnership,and Michael withdrew $75,000.Discuss the impact of this information on the taxable income of Trout,Glen,and Michael.

• A)Trout has $0 taxable income, Glen's taxable income increases by $50,000, and Michael's taxable income increases by $75,000.
• B)Trout has $230,000 taxable income, Glen's taxable income increases by $50,000, and Michael's taxable income increases by $75,000.
• C)Trout has $0 taxable income, Glen's taxable income increases by $175,000, and Michael's taxable income increases by $175,000.
• D)Trout has $0 taxable income, Glen's taxable income increases by $115,000, and Michael's taxable income increases by $115,000.
• E)None of the above.

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