In the Current Year,the DOE Partnership Received Revenues of $100,000

In the current year,the DOE Partnership received revenues of $100,000 and paid the following amounts: $20,000 in rent and utilities,a $30,000 guaranteed payment to 50% partner Don,$6,000 to partner Eugene for consulting services,and $10,000 as a distribution to partner Olivia.In addition,the partnership earned $4,000 of qualifying dividend income during the year.Don's basis in his partnership interest was $35,000 at the beginning of the year,and includes a $10,000 share of partnership liabilities.At the end of the year,his share of partnership liabilities was $20,000.How much income must Don report for the tax year,and what is his basis in his partnership interest at the end of the year?

A) $25,000 ordinary income; $2,000 of qualifying dividends; $62,000 basis.
B) $24,000 ordinary income; $30,000 guaranteed payment; $89,000 basis.
C) $22,000 ordinary income; $2,000 of qualifying dividends; $30,000 guaranteed payment; $69,000 basis.
D) $17,000 ordinary income; $2,000 of qualifying dividends; $30,000 guaranteed payment; $84,000 basis.
E) None of the above.

Correct Answer:

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