Nicholas,a 40% partner in Nedeau Partnership,gives one-half of his interest to his sister,Michelle.During the current year,Nicholas performs services for the partnership for which reasonable compensation is $80,000,but for which he accepts no pay.Nicholas and Michelle are each credited with a $100,000 distributive share,all of which is ordinary income.What are Nicholas' and Michelle's distributive share?

Question

Quizplus · Accepted Answer

D)
 11ea7cb8_54eb_8816_928c_8702777e614a_TB1258_00 Nicholas' distributive share [(20%/40%)× $120,000] + $80,000 = $140,000
Michelle's distributive share (20%/40%)× $120,000 = $60,000

Nicholas,a 40% Partner in Nedeau Partnership,gives One-Half of His Interest