Latoya owns a 10% interest in the ABC Partnership from January 1 through June 30 (the 181st day of the tax year) of the current year (a non- leap year). On July 1, Latoya buys an additional 10% interest in the partnership. The XYZ Partnership's ordinary income is $109,500 and it is earned evenly throughout the year. Latoya's distributive share of the ordinary income is

Question

Quizplus · Accepted Answer

Latoya owns a 10% interest in the partnership for the first 181 days and an additional 10% interest for the remaining 184 days (July 1 through December 31). Therefore, her weighted average ownership percentage for the entire year is:

[(10% x 181) + (20% x 184)] / 365 = 15%

Her distributive share of the partnership's ordinary income is then calculated by multiplying the total income by her ownership percentage:

$109,500 x 15% = $16,470.

Therefore, the correct answer is C.

Latoya Owns a 10% Interest in the ABC Partnership from January