Compute the partnerships ordinary income

Reference no: EM133320675

Case: The Outside Designs Partnership incurred the following items in the current year (2021): Sales $ 450,000 Cost of goods sold 210,000 Dividends on corporate investments 15,000 Tax-exempt interest income 4,000 Section 1245 gain (recapture) on equipment sale 33,000 Section 1231 gain on equipment sale 18,000 Long-term capital gain on stock sale 12,000 Long-term capital loss on stock sale 10,000 Short-term capital loss on stock sale 9,000 Depreciation (no Sec. 179 or bonus depreciation) 27,000 Guaranteed payments to Marla for services 30,000 Expense for business meals (incurred in restaurants) 2,000 Interest expense on loans allocable to: Business debt 42,000 Stock investments 9,200 Tax-exempt bonds 2,800 Principal payment on business loan 14,000 Charitable contributions 5,000 Distribution to partners ($40,000 each) 80,000

Question (A) Compute the partnership's ordinary income and separately stated items.

Question (B) Show Marla's and Steve's shares of the items in Part (A). Which items would qualify as business income for the QBI deduction?

Question (C) Compute Marla's and Steve's ending basis in their partnership interests (use the beginning balances determined above). Show your calculations.

Reference no: EM133320675

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