Wayne owns a 30% interest in the capital and profits of Emerald Company (a calendar year partnership).For tax year 2013,the partnership earned revenue of $900,000 and had operating expenses of $660,000.During the year,Wayne withdrew from the partnership a total of $90,000.He also invested an additional $30,000 in the partnership.For 2013,Wayne's gross income from the partnership is:

Question

Quizplus · Accepted Answer

Wayne must report as his gross income 30% of the partnership profits,30% × ($900,000 - $660,000)= $72,000.The $90,000 is a return of capital.The $30,000 is a contribution to capital.

Wayne Owns a 30% Interest in the Capital and Profits