Stephanie is a calendar year cash basis taxpayer. She owns a 50% profit and loss interest in a cash basis partnership with a September 30 year-end. The partnership's operating income (after deducting guaranteed payments) was $120,000 ($10,000 per month) and $144,000 ($12,000 per month), respectively, for the partnership tax years ended September 30, 2015 and 2016. The partnership paid guaranteed payments to Stephanie of $2,000 and $3,000 per month during the fiscal years ended September 30, 2015 and 2016. How much will Stephanie's adjusted gross income be increased by these partnership items for her tax year ended December 31, 2015?
A)$60,000
B)$72,000
C)$84,000
D)$90,000
E)$108,000

Question

Quizplus · Accepted Answer

Stephanie's share of the partnership's operating income for the tax year ended September 30, 2015, is $60,000 (50% of $120,000). Her share for the period from October to December 2015 (3 months of the 2016 fiscal year) is $18,000 (50% of $36,000). Additionally, she received guaranteed payments of $24,000 for the 2015 fiscal year ($2,000 x 12 months). Therefore, her adjusted gross income is increased by $84,000 ($60,000 + $18,000 + $24,000 - $18,000 already included in operating income).

Stephanie Is a Calendar Year Cash Basis Taxpayer