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PDK, LLC had three members with equal ownership percentages. PDK elected to be treated as a partnership. For the tax year ending December 31, Year 1, PDK had the following income and expense items:
Revenues
$ 120,000
Interest income
6,000
Gain on sale of securities
8,000
Salaries
36,000
Guaranteed payments
10,000
Rent expense
21,000
Depreciation expense
18,000
Charitable contributions
3,000
Becker states that the guaranteed payments are a part of ordinary income, but I thought on a partnership K-1 guaranteed payments have their own line? They say the answer is 35,000 including the guaranteed payments in the ordinary income calculation. Someone please help!
FAR - 78
REG - 88
AUD - 10/24/2015
BEC - 11/22/2015
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