Kyle gifts a 40% interest in his consulting business to his daughter Amy. For the current tax year, the KA Partnership reports income of $100,000. Kyle's services to the partnership were valued at $40,000. For the current tax year, Amy would report a $24,000 share of the partnership's income.

Question

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Since Kyle gifted a 40% interest in his consulting business to his daughter Amy, she would be entitled to a 40% share of the partnership's income. Therefore, her share of the partnership's income for the current tax year would be $40,000 (Kyle's services) plus 40% of $100,000 (the partnership's income), which equals $24,000.

Kyle Gifts a 40% Interest in His Consulting Business to His