Molly is a 30% partner in the MAP Partnership. During the current tax year, the partnership reported ordinary income of $200,000 before payment of guaranteed payments and distributions to partners. The partnership made an ordinary cash distribution of $20,000 to Molly, and paid guaranteed payments to partners Molly, Amber, and Pat of $20,000 each ($60,000 total guaranteed payments). How much will Molly's adjusted gross income increase as a result of the above items?
A)$42,000
B)$60,000
C)$62,000
D)$80,000
E)None of the above

Question

Quizplus · Accepted Answer

Molly's share of the partnership's ordinary income is $60,000 (30% of $200,000). Her share of the guaranteed payments is $20,000. Her total income from the partnership for the year is therefore $80,000. Since she received a cash distribution of $20,000, her adjusted gross income from the partnership is $100,000 ($80,000 + $20,000).

Molly Is a 30% Partner in the MAP Partnership