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Robert is a 50% partner in the RB partnership
Robert is a 50% partner in the RB partnership. RB partnership has taxable income for the year of $400,000. Robert received a $75,000 distribution from the partnership. What amount of income related to RB partnership must Robert recognize in his personal income tax return?
$37,500
$200,000
$75,000
$100,000
Expert Solution
Computation of Amount of Income related to RB partnership must Robert recognize in his personal income tax return:
Interest of Robert in the Partnership firm (DJ) = 50%.
Income earned during the year = $400,000
So, Robert share of Income = $400,000 * 50% = $200,000.
So, even though Robert has actually received $75,000 only, Robert needs to recognise $200,000.
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