Rich is a partner in RKW partnership. Rich owned 50% from January 1, 2015 to April 30, 2015, when he bought Kevin's 25% interest. He owned 75% for the rest of the year (assume a 365-day year). The partnership had ordinary income of $150,000 and $25,000 in long-term capital gains. Barring any special allocations in a partnership agreement, Rich's share of the income items is:

Question

Quizplus · Accepted Answer

To calculate Rich's share of income, we need to break down his ownership percentages by time period:

From January 1, 2015 to April 30, 2015: 50%
From May 1, 2015 to December 31, 2015: 75%

To calculate his share of the ordinary income:
[(50% x 120 days/365 days) + (75% x 245 days/365 days)] x $150,000 = $100,172

To calculate his share of the long-term capital gains:
[(50% x 120 days/365 days) + (75% x 245 days/365 days)] x $25,000 = $16,696

Therefore, the correct answer is B, $100,172 ordinary income and $16,696 capital gain.

Rich Is a Partner in RKW Partnership