Stephanie is a calendar year cash basis taxpayer.She owns a 50% profit and loss interest in a cash basis partnership with a September 30 year-end.The partnership's operating income (after deducting guaranteed payments) was $120,000 ($10,000 per month) and $144,000 ($12,000 per month), respectively, for the partnership tax years ended September 30, 2012 and 2013.The partnership paid guaranteed payments to Stephanie of $2,000 and $3,000 per month during the fiscal years ended September 30, 2012 and 2013.How much will Stephanie's adjusted gross income be increased by these partnership items for her tax year ended December 31, 2012?

Question

Quizplus · Accepted Answer

Stephanie's share of operating income for the partnership tax year ended September 30, 2012 is $60,000 (50% of $120,000), and her share for the partnership tax year ended September 30, 2013 is $72,000 (50% of $144,000).

Stephanie's guaranteed payments for the fiscal year ended September 30, 2012 total $24,000 (12 months x $2,000 per month), and her guaranteed payments for the fiscal year ended September 30, 2013 total $36,000 (12 months x $3,000 per month).

Since Stephanie is a calendar year taxpayer, she must include her share of partnership income and guaranteed payments in her income for the tax year ended December 31, 2012. Therefore, her AGI will be increased by $84,000 ($60,000 operating income + $24,000 guaranteed payments) for 2012.

Stephanie Is a Calendar Year Cash Basis Taxpayer