Wayne owns a 30% interest in the capital and profits of Emerald Company (a calendar year partnership).For tax year 2019, the partnership earned revenue of $900,000 and had operating expenses of $660,000.During the year, Wayne withdrew from the partnership a total of $90,000.He also invested an additional $30,000 in the partnership.For 2019, Wayne's gross income from the partnership is:
A)$72,000.
B)$90,000.
C)$132,000.
D)$162,000.

Question

Quizplus · Accepted Answer

Wayne's share of the partnership's profit is calculated as follows: The partnership's net income is $900,000 (revenue) - $660,000 (expenses) = $240,000. Wayne owns a 30% interest, so his share of the profit is 30% of $240,000 = $72,000. Withdrawals and additional investments do not affect the calculation of gross income from the partnership.

Wayne Owns a 30% Interest in the Capital and Profits