Molly is a 40% partner in the MAP Partnership. During the current tax year, the partnership reported ordinary income of $210,000 before payment of guaranteed payments and distributions to partners. The partnership made an ordinary cash distribution of $30,000 to Molly, and paid guaranteed payments to partners Molly, Amber, and Pat of $30,000 each ($90,000 total). How much will Molly's adjusted gross income increase as a result of the above items?
A) $88,000.
B) $78,000.
C) $66,000.
D) $36,000.
E) None of the above.

Question

Quizplus · Accepted Answer

First, we need to calculate Molly's share of the partnership income:
$210,000 x 40% = $84,000
Then we need to add the guaranteed payment she received:
$84,000 + $30,000 = $114,000
Finally, we need to subtract the cash distribution she received:
$114,000 - $30,000 = $84,000
This means Molly's share of the partnership income increased her adjusted gross income by $84,000.

Molly Is a 40% Partner in the MAP Partnership