Nash and Ford are partners who share profits and losses equally. For the current tax year, the partnership had book income of $70,000 which included the following deductions: Guaranteed payments to partners:
$\begin{array}{lr}
\text { Nash } & \$ 35,000 \
\text { Ford } & 25,000 \
\text { Charitable contributions } & 5,000
\end{array}$ What amount should be reported as ordinary income on the partnership return for the current tax year?

Question

Quizplus · Accepted Answer

The partnership's ordinary income is $70,000 + $35,000 + $25,000 = $130,000. The guaranteed payments to partners are not deductible for purposes of computing ordinary income. The charitable contributions are not deductible for purposes of computing ordinary income.

Nash and Ford Are Partners Who Share Profits and Losses Nash $35,000 Ford 25,000 Charitable contributions 5,000\begin{array}{lr}\text { Nash } & \$ 35,000 \\\text { Ford } & 25,000 \\\text { Charitable contributions } & 5,000\end{array} Nash Ford Charitable contributions ​$35,00025,0005,000​

Nash and Ford Are Partners Who Share Profits and Losses $\begin{array}{lr}\text { Nash } & \$ 35,000 \\\text { Ford } & 25,000 \\\text { Charitable contributions } & 5,000\end{array}$