Carol owns 40 percent of CJ Partnership. The partnership reports $170,000 of revenue, $60,000 cost of goods sold, and $70,000 of other expenses that include $1,500 of doctor bills paid for Carol, a $2,000 charitable contribution, and a $5,000 Section 179 deduction. What is the bottom line net income reported on Carol's Schedule K-1?

Question

Quizplus · Accepted Answer

$170,000 - $60,000 = $110,000; $70,000 - $2,000 - $5,000 = $63,000; ($110,000 - $63,000) x .4 = $18,800; the $1,500 doctor bill paid by the partnership is a distribution to Carol and not an expense of the partnership.

Carol Owns 40 Percent of CJ Partnership