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: $$\begin{array}{l}
\text { Guaranteed payments to partners: }\
\begin{array} { l r }
\text { Nash } & \$ 35,000 \
\text { Ford } & 25,000 \
\text { Charitable contributions } & 5,000
\end{array}
\end{array}$$ What amount should be reported as ordinary income on the partnership return for the current tax year?

Question

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: $$\begin{array}{l}
\text { Guaranteed payments to partners: }\
\begin{array} { l r } 
\text { Nash } & \$ 35,000 \
\text { Ford } & 25,000 \
\text { Charitable contributions } & 5,000
\end{array}
\end{array}$$ What amount should be reported as ordinary income on the partnership return for the current tax year?

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 tax purposes, and the charitable contributions are not deductible for tax purposes because the partnership is not a corporation.

Nash and Ford Are Partners Who Share Profits and Losses