Question

Wayne owns a 30% interest in the capital and profits of Emerald Company (a calendar year partnership). For tax year 2019, the partnership earned revenue of $900,000 and had operating expenses of $660,000. During the year, Wayne withdrew from the partnership a total of $90,000. He also invested an additional $30,000 in the partnership. For 2019, Wayne's gross income from the partnership is:

Answer 1

Answer:

$72,000

Explanation:

Given that,

Partnership earned revenue = $900,000

Operating expenses = $660,000

Withdrawal by Wayne = $90,000

Additional investment by Wayne = $30,000

Wayne's gross income from the partnership is:

= Tax rate × (Earned revenue - Operating expenses)

= 30% × ( $900,000 - $660,000)

= 0.3 × $240,000

= $72,000