Donald owns a 60% interest in a partnership that earned $230,000 in the current year. He also owns 60% of the stock in a C corporation that earned $230,000 during the year. Donald received $50,000 in distributions from each of the two entities during the year. With respect to this information, Donald must report $188,000 of income on his individual income tax return for the year.

Question

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Donald must report $138,000 from the partnership (60% of $230,000) and $50,000 from the C corporation distribution, totaling $188,000.

Donald Owns a 60% Interest in a Partnership That Earned