Nicholas, a 40% partner in Nedeau Partnership, gives one-half of his interest to his sister, Michelle.During the current year, Nicholas performs services for the partnership for which reasonable compensation is $80,000, but for which he accepts no pay.Nicholas and Michelle are each credited with a $100,000 distributive share, all of which is ordinary income.What are Nicholas' and Michelle's distributive share?

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Quizplus · Accepted Answer

D)
 11ea83d0_ede1_8f2a_908c_65c03e0d051f_TB5378_00 Nicholas' distributive share [(20%/40%) × $120,000] + $80,000 = $140,000
Michelle's distributive share (20%/40%) × $120,000 = $60,000

Nicholas, a 40% Partner in Nedeau Partnership, Gives One-Half of His