Identify which of the following statements is true.
A)A partner's distributive share includes the full amount of partnership ordinary income, which she must report on her tax return plus her share of separately stated taxable and tax-exempt items.
B)Sam has a 20% interest in partnership capital and profits but a 40% interest in partnership losses. The partnership has no special allocations or precontribution gains or losses. In a year in which the partnership reports ordinary income of $100,000 and a capital loss of $30,000, Sam's distributive share is $20,000 ordinary income and $12,000 capital loss.
C)The partner's distributive share is the partner's share of any assets distributed by the partnership.
D)All of the above are false.

Question

Quizplus · Accepted Answer

A partner's distributive share includes the full amount of partnership ordinary income, which she must report on her tax return plus her share of separately stated taxable and tax-exempt items. Statement B is incorrect because Sam's distributive share of the capital loss would be limited to $6,000 (20% of the $30,000 loss), not $12,000. Statement C is incorrect because the partner's distributive share refers to the partner's share of the partnership's income and losses for the year, not any assets distributed by the partnership.

Identify Which of the Following Statements Is True