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How much ordinary business income will bright line allocate

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Reference no: EM132990457

Problem 1: Kim received a 1/3 profits and capital interest in Bright Line, LLC in exchange for legal services she provided. In addition to her share of partnership profits or losses, she receives a $31,000 guaranteed payment each year for ongoing services she provides to the LLC. For X4, Bright Line reported the following revenues and expenses: Sales - $151,000, Cost of Goods Sold - $91,000, Depreciation Expense - $47,000, Long-Term Capital Gains - $16,000, Qualified Dividends - $6,100, and Municipal Bond Interest - $3,100. How much ordinary business income (loss) will Bright Line allocate to Kim on her Schedule K-1 for X4?

Option 1: None of the choices will be reported as ordinary business income (loss) on Schedule K-1.
Option 2: $13,000.
Option 3: $6,900.
Option 4: ($18,000).

Reference no: EM132990457

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