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:

Common Stock

A type of equity security that represents ownership in a corporation, providing voting rights and the potential for dividend payments.

Par Value

the face value of a bond or stock, as stated by the issuing company, not necessarily its market value.

Convertible Preferred Stock

A type of preferred stock that grants the holder the option to convert the stock into a set number of shares of common stock, usually at any time after a predetermined date.

Common Stock

Common stock represents ownership shares in a corporation, giving holders voting rights and a share in the company's profits through dividends.