QT Partnership, which operates a retail clothing store, had the following information at year-end: $$\begin{array} { l r }
\text { Gross sales } & \$ 580,000 \
\text { Cost of goods sold } & 377,000 \
\text { Repairs } & 1,500 \
\text { Depreciation } & 2,000 \
\text { Employee salaries } & 32,000 \
\text { Charitable contributions } & 500 \
\text { Section 1231 gain } & 200 \
\text { Short-term capital gain } & 350 \
\text { Dividends } & 750
\end{array}$$ What is QT Partnership's ordinary income for the year?

Question

QT Partnership, which operates a retail clothing store, had the following information at year-end: $$\begin{array} { l r } 
\text { Gross sales } & \$ 580,000 \
\text { Cost of goods sold } & 377,000 \
\text { Repairs } & 1,500 \
\text { Depreciation } & 2,000 \
\text { Employee salaries } & 32,000 \
\text { Charitable contributions } & 500 \
\text { Section 1231 gain } & 200 \
\text { Short-term capital gain } & 350 \
\text { Dividends } & 750
\end{array}$$ What is QT Partnership's ordinary income for the year?

Quizplus · Accepted Answer

Ordinary income is calculated as gross sales minus cost of goods sold, repairs, depreciation, employee salaries, and charitable contributions. In this case, ordinary income is $580,000 - $377,000 - $1,500 - $2,000 - $32,000 - $500 = $167,500.

QT Partnership, Which Operates a Retail Clothing Store, Had the Following