What income will Joe have reported to him on his Schedule

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Question - Joe and Terry are partners in Bulldog Bar. Terry bartends and oversees operations of the bar five nights a week and is paid a guaranteed payment of $1,000 per month. Joe receives no guaranteed payments or distributions of any kind. Joe owns 30% and Terry owns 70% of the partnership. The Bulldog Bar had a gross profit of $70,000 from the sale of food and spirits for the year. In addition to the guaranteed payment, the Bulldog Bar paid the following.

$10,000 in salaries

$2,000 in payroll taxes

$1,500 in liability insurance

$1,000 in utilities

Claimed $20,000 in bonus depreciation on assets placed in service during the year

Required -

What income will Terry have reported to him on his Schedule K-1?

What income will Joe have reported to him on his Schedule K-1?

Reference no: EM132988334

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