What income or loss will den report on current-year tax

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Problem 1: Den and Carr are partners in the Den-Carr Pa nership. Under the terms of the partnership agreement, Den is to receive 25% of all partnership income or loss plus a guaranteed payment of $80,000 per year. In the current tax year, Den-Carr had $72,000 of ordinary income before any deduction for Den's payment. What income (loss) will Den report on his current-year tax return assuming he materially pa icipates in partnership activities?

A. $18,000 ordinary income; $80,000 guaranteed payment.
B. $18,000 ordinary income; $62,000 guaranteed payment.
C. $80,000 guaranteed payment.
D. $80,000 guaranteed payment; $2,000 ordinary loss.

Reference no: EM132688866

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