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)$48,000.
E)None of the above.

Question

Quizplus · Accepted Answer

Molly's share of the partnership's ordinary income is 40% of $210,000, which is $84,000. Adding her guaranteed payment of $30,000, her total income from the partnership is $114,000. The $30,000 cash distribution is not included in her AGI. Therefore, her AGI increases by $114,000 - $30,000 (guaranteed payment already included in ordinary income) = $78,000.

Molly Is a 40% Partner in the MAP Partnership