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, 2019 and 2020. The partnership paid guaranteed payments to Stephanie of $2,000 and $3,000 per month during the fiscal years ended September 30, 2019 and 2020. How much will Stephanie's adjusted gross income be increased by these partnership items for her tax year ended December 31, 2019?
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, 2019, is $60,000 (50% of $120,000). Her guaranteed payments for the same period are $24,000 ($2,000 per month for 12 months). Therefore, her adjusted gross income is increased by $84,000 ($60,000 + $24,000) for her tax year ended December 31, 2019.

Stephanie Is a Calendar Year Cash Basis Taxpayer