Question

Mabel, Loretta, and Margaret are equal partners in a local restaurant. The restaurant reports the following items for the current year: Revenue $ 520,000; Business expenses 270,000; Investment expenses 138,000; Short-term capital gains 128,000; Short-term capital losses (177,100). Each partner receives a Schedule K-1 with one-third of the preceding items reported to her. Required: How must each individual report these results on her Form 1040?

Answer 1

Each partner must report their share of the items on their Form 1040.

Step-by-step explanation:

Each partner must report their share of the items on their Form 1040.

Revenue: Each partner should report $520,000 divided by 3, which is $173,333.33.

Business expenses: Each partner should report $270,000 divided by 3, which is $90,000.

Investment expenses: Each partner should report $138,000 divided by 3, which is $46,000.

Short-term capital gains: Each partner should report $128,000 divided by 3, which is $42,666.67.

Short-term capital losses: Each partner should report ($177,100) divided by 3, which is ($59,033.33).

Therefore, each partner should report the above amounts on their respective Form 1040.