Rich is a partner in RKW partnership.Rich owned 50% from January 1,2014 to April 30,2014,when he bought Kevin's 25% interest.He owned 75% for the rest of the year (assume a 365-day year).The partnership had ordinary income of $150,000 and $25,000 in long-term capital gains.Barring any special allocations in a partnership agreement,Rich's share of the income items is:

Question

Quizplus · Accepted Answer

Firstly, we need to calculate Rich's ownership percentage and the number of days that he held each percentage.

- From January 1, 2014 to April 30, 2014 (120 days): Rich owned 50%
- From May 1, 2014 to December 31, 2014 (245 days): Rich owned 75%

Weighted average ownership percentage = (50% * 120/365) + (75% * 245/365) = 66.16%

Now, we can calculate Rich's share of the income items:

- Ordinary income: $150,000 * 66.16% = $99,240
- Long-term capital gains: $25,000 * 66.16% = $16,540

Therefore, the closest option is B: $100,172 ordinary income; $16,696 capital gain.

Rich Is a Partner in RKW Partnership