Elena owns 25% of a partnership that reported net income of $100,000 for the year.Elena's basis in her partnership interest is $20,000 at the beginning of the year.During the year $5,000 was distributed to Elena from the partnership.How much should Elena include in her gross income for the year?
A)$30,000
B)$25,000
C)$5,000
D)$0

Question

Quizplus · Accepted Answer

Elena should include her share of the partnership's net income in her gross income, which is 25% of $100,000, equaling $25,000. Distributions do not affect gross income as they are considered a return of capital up to the basis in the partnership interest.

Elena Owns 25% of a Partnership That Reported Net Income