Stephanie is a 40 percent partner in the SKY Partnership. During the current tax

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

Please show work. ty.

Explanation / Answer

Calculation of increase in Stephanie's adjusted gross income Adjusted Gross Income 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 The answer is Option B.

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