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:

Emancipation

The act of freeing individuals from bondage or slavery, often refers specifically to the liberation of slaves during the U.S. Civil War.

Economic Opportunities

Refers to the chances or prospects available within a society for individuals or groups to improve their financial and social status through employment, entrepreneurship, and investment.

Fourteenth Amendment

An amendment to the US Constitution, ratified in 1868, granting citizenship to all persons born or naturalized in the United States, including former slaves, and guaranteeing all citizens equal protection of the laws.

Ratification

The formal approval or confirmation of an agreement, treaty, constitution, or law, making it officially valid and binding.