Kristie is a 30% partner in the KKM Partnership. During the current year, KKM reported gross receipts of $280,000 and a charitable contribution of $30,000. The partnership paid office expenses of $80,000. In addition, KKM distributed $20,000 each to partners Kaylyn and Megan, and the partnership paid partner Kaylyn $20,000 for administrative services. Kristie reports the following income from KKM during the current tax year:
A)$54,000 ordinary income; $9,000 charitable contribution.
B)$60,000 ordinary income; $9,000 charitable contribution.
C)$36,000 ordinary income.
D)$54,000 ordinary income.
E)None of the above.

Question

Quizplus · Accepted Answer

Kristie's share of the partnership's ordinary income is 30% of the net income (gross receipts minus expenses), which is $54,000. Her share of the charitable contribution is 30% of $30,000, which is $9,000.

Kristie Is a 30% Partner in the KKM Partnership