Molly is a 30% partner in the MAP Partnership.During the current tax year,the partnership reported ordinary income of $200,000 before payment of guaranteed payments and distributions to partners.The partnership made an ordinary cash distribution of $20,000 to Molly,and paid guaranteed payments to partners Molly,Amber,and Pat of $20,000 each ($60,000 total guaranteed payments).How much will Molly's adjusted gross income increase as a result of the above items?

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Molly's share of the ordinary income is $200,000 x 30% = $60,000. She also received a cash distribution of $20,000 and a guaranteed payment of $20,000. Therefore, Molly's total taxable income increase is $60,000 + $20,000 + $20,000 = $100,000. However, only the guaranteed payment is subject to self-employment tax, which is 15.3% for 2020. Therefore, Molly's adjusted gross income will increase by $60,000 + ($20,000 x 0.153) = $62,060.

Molly Is a 30% Partner in the MAP Partnership