Rowan and Sanjay are equal partners in a partnership,which uses the calendar year as its tax year.On September 1,this year,Hailley contributed $60,000 cash for a one-third interest in the partnership.The partnership reports $72,000 of ordinary income for the tax year ending on December 31 of this year.The income allocation to Hailley is (assume the elective proration method with a monthly convention)
A)$24,000.
B)$12,000.
C)$0.
D)$8,000.

Question

Quizplus · Accepted Answer

Hailley joined the partnership on September 1, so she is a partner for 4 months of the year. Using the elective proration method with a monthly convention, the income is allocated based on the time she was a partner. The partnership's total income is $72,000, and Hailley's share for 4 months is $72,000 * (1/3) * (4/12) = $8,000.

Rowan and Sanjay Are Equal Partners in a Partnership,which Uses