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)

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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 partnership's income is allocated based on the number of months each partner was in the partnership. The total income is $72,000, and Hailley's share for 4 months is calculated as: ($72,000 / 12 months) * 4 months * 1/3 interest = $8,000.

Rowan and Sanjay Are Equal Partners in a Partnership, Which