Question

For the year ended December 31, 2019, the partnership of Murray and Parker had book income of $100,000, which included the following: Long-term capital gain $ 7,000 Section 1231 loss (3,000) Dividends 200 Interest paid to partners for use of capital 12,000 The partners share profits and losses equally. What amount of partnership income (excluding all partnership items that must be reported separately) should each partner report in his individual income tax return for 2019?

Answer 1

$47,900

Step-by-step explanation:

To determine the amount that both partners must report in their individual income tax return we can start with the partnership's book income and start subtracting net capital gains and subtracting dividends.

$100,000 - ($7,000 - $3,000) - $200 = $100,000 - $4,000 - $200 = $95,800

now we divide between the two partners = $95,800 / 2 = $47,900