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 a $2,000 charitable contribution and a $5,000 Section 179 deduction.CJ Partnership also paid $1,500 of doctor bills for Carol, What is the ordinary business income reported on line 1 of Carol's Schedule K-1?

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$18,800To calculate the ordinary business income reported on line 1 of Carol's Schedule K-1, we start with the partnership's net income before specific deductions. The partnership's revenue is $170,000, cost of goods sold is $60,000, and other expenses total $70,000. This gives us a net income of $40,000 ($170,000 - $60,000 - $70,000). Carol owns 40% of CJ Partnership, so her share of the net income is $16,000 (40% of $40,000). The $2,000 charitable contribution and the $5,000 Section 179 deduction are separately stated items and not included in the calculation of ordinary business income. However, the $1,500 of doctor bills paid for Carol is considered a guaranteed payment and should be added back to her share of the income. Therefore, Carol's ordinary business income reported on line 1 of her Schedule K-1 is $16,000 + $1,500 = $17,500. However, since none of the provided options exactly match this calculation, and considering the typical approach to such questions, it appears there might have been a mistake in the calculation process or in interpreting the options. Given the options provided and the typical calculations for Schedule K-1, the closest correct approach based on the information would involve considering all adjustments properly, but it seems there was an error in the explanation process. The correct calculation should consider all partnership adjustments and Carol's specific adjustments accurately. Given the discrepancy, the correct answer based on the provided options and typical tax treatment would involve recalculating Carol's share of the partnership's ordinary business income, including her specific adjustments. However, without further specific details on the treatment of each item for tax purposes, the precise calculation might vary. The explanation aimed to follow standard tax calculation procedures but may have overlooked the specific treatment of the provided figures in the context of the options given.

Carol Owns 40 Percent of CJ Partnership