The XYZ Partnership reports the following operating results for the current year: Tai has a 20% profits interest and a 25% loss interest in the XYZ Partnership.His distributive share of ordinary income is
A)$6,800.
B)$8,500.
C)$10,000.
D)$12,500.

Question

The XYZ Partnership reports the following operating results for the current year:  Tai has a 20% profits interest and a 25% loss interest in the XYZ Partnership.His distributive share of ordinary income is
A)$6,800. 
B)$8,500. 
C)$10,000. 
D)$12,500.

Quizplus · Accepted Answer

D)Since the partnership has a net loss [($40,000)+ ($16,000)+ $50,000 = ($6,000)] for the year,Tai's distributive share of the $50,000 of ordinary income is calculated using the 25% loss interest.

The XYZ Partnership Reports the Following Operating Results for the Current