Kaylyn is a 40% partner in the KKM Partnership.During the current year, KKM reported gross receipts of $160,000 and a charitable contribution of $10,000.The partnership paid office expenses of $100,000.In addition, KKM distributed $10,000 each to partners Kaylyn and Kristie, and the partnership paid partner Megan $20,000 for administrative services.Kaylyn reports the following income from KKM during the current tax year:
A)$16,000 ordinary income; $4,000 charitable contribution.
B)$8,000 ordinary income; $4,000 charitable contribution.
C)$4,000 ordinary income.
D)$12,000 ordinary income.
E)None of the above.

Question

Quizplus · Accepted Answer

Kaylyn's share of the partnership's ordinary income is 40% of ($160,000 gross receipts - $100,000 office expenses - $20,000 paid to Megan), which equals $16,000. Her share of the charitable contribution is 40% of $10,000, which equals $4,000.

Kaylyn Is a 40% Partner in the KKM Partnership