Donald Owns a 60% Interest in a Partnership That Earned

question 37

True/False

Donald owns a 60% interest in a partnership that earned $230,000 in the current year. He also owns 60% of the stock in a C corporation that earned $230,000 during the year. Donald received $50,000 in distributions from each of the two entities during the year. With respect to this information, Donald must report $188,000 of income on his individual income tax return for the year.

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Definitions:

Reasonableness

A standard of fairness, appropriateness, and rationality often used in legal and ethical judgments.

Goodwill

An intangible asset reflecting the value of a company's brand, customer relations, employee morale, and other non-physical assets.

Enforce

To compel observance of or obedience to a law, rule, or obligation.

Negotiated Clause

A provision in a contract that has been specifically discussed and agreed upon by all parties involved.