Question

Stephanie is a 40 percent partner in the SKY Partnership. During the current tax year, the partnership reported ordinary income of $210,000 before payment of guaranteed payments and distributions to partners. The partnership paid guaranteed payments to partners Stephanie, Kirsten, and Yule of $30,000 each ($90,000 total). How much will Stephanie's adjusted gross income increase as a result of the above items?

A. $88,000
B. $48,000
C. $78,000
D. $66,000

Answer 1

The answer is Option B.

$48000

Step-by-step explanation:

Guaranteed payment $30,000.00

Balance distribution [($210000-$90000)*40%] $48,000.00

Stephanie's adjusted gross income $78,000.00

Less : Guaranteed Payment every year $30,000.00

Increase in Stephanie's adjusted gross income $48,000.00