Question

mark is a limited partner in lambda partnership. his schedule k-1 this year reflects $35,000 share of ordinary income and $50,000 guaranteed payment. what amount of mark's partnership earnings is subject to self-employment tax?multiple choice question.$85,000$35,000$0$50,000

Answer 1

Mark's earnings subject to self-employment tax are the $50,000 in guaranteed payments, but not the $35,000 share of ordinary income.

Step-by-step explanation:

The amount of Mark's partnership earnings subject to self-employment tax is the $50,000 he received as a guaranteed payment. Limited partners generally do not have to pay self-employment tax on their share of partnership earnings unless those earnings are guaranteed payments for services they actually rendered to or on behalf of the partnership. Since the $35,000 share of ordinary income is likely a distributive share and not a payment for services, it should not be subject to self-employment tax. Therefore, the correct answer to the multiple-choice question is $50,000.