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Apple557
Apple557
25.12.2020 • 
Business

Jhumpa, Stewart, and Kelly are all one-third partners in the capital and profits of Firewalker general partnership.In addition to their normal share of the partnership’s annual income, Jhumpa and Stewart receive an annual guaranteed payment of $10,000 to compensate them for additional services they provide.Firewalker’s income statement for the current year reflects the following revenues and expenses:Sales revenue $340,000Interest income 3,300Long-term capital gains 1,200Cost of goods sold (120,000)Employee wages (75,000)Depreciation expense (28,000)Guaranteed payments (20,000)Miscellaneous expenses (4,500)Overall net income $97,000a. Given Firewalker’s operating results, how much ordinary business income (loss) and what separately stated items [including the partners’ self-employment earnings (loss)]will it report on its return for the year?b. How will it allocate these amounts to its partners?c. How much self-employment tax will each partner pay assuming none have any other source of income or loss?

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