Joseph is the managing general partner of JKL, in which he owns a 40% interest. For the year, JKL reported income of $300,000 (after deducting all guaranteed payments). Joseph received a guaranteed payment of $20,000 for capital that he had loaned the partnership, and he received a guaranteed payment of $100,000 for services he performed for JKL. How much income from self-employment did Joseph earn from JKL?
A) $20,000.
B) $100,000.
C) $120,000.
D) $220,000.
E) $240,000.

Question

Quizplus · Accepted Answer

Joseph's self-employment income includes his share of the partnership income and the guaranteed payment for services. His share of the partnership income is 40% of $300,000, which is $120,000. Adding the $100,000 guaranteed payment for services, his total self-employment income is $220,000. The $20,000 guaranteed payment for capital is not considered self-employment income.

Joseph Is the Managing General Partner of JKL, in Which