Cornell and Joe Are Equal Partners in Jones Company In Addition to His Jones Earnings, Joe Has Other Net

question 86

Multiple Choice

Cornell and Joe are equal partners in Jones Company. For the current year, Jones reports the following items of income and expense:
?
$$\begin{array} { l r } \text { Sales revenues } & \$ 500,000 \\\text { Long-term capital gains } & 14,000 \\\text { Short-term capital losses } & ( 30,000 ) \\\text { Trade and business expenses } & ( 200,000 ) \\\text { Limited partnership loss } & ( 50,000 ) \\\text { Taxable income } & \$ 234,000\end{array}$$
In addition to his Jones earnings, Joe has other net taxable income of $45,000. Included in the $45,000 is $10,000 in income from a passive activity. Joe's income is:

• A)$152,000
• B)$157,000
• C)$162,000
• D)$167,000
• E)$182,000

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Definitions:

Boeing

An American multinational corporation that designs, manufactures, and sells airplanes, rotorcraft, rockets, satellites, telecommunications equipment, and missiles worldwide.

Law of Diminishing Returns

An economic principle stating that adding more of one factor of production, while holding others constant, will at some point yield lower per-unit returns.

Fixed Factor

An input in the production process that cannot be changed in the short term, such as premises or machinery.

Output Decreasing

A situation where the quantity of goods or services produced by an economy or firm is reducing over time.