[sunny810]

graphite corp has been a calandar S corp since 1/2/05. on 1/1/09, smith and tyler each owned 50% of Graphite stock, in which their respective bases were $12,000 and $9,000. for the yeard ended 12/31/09, graphite had $80,000 in ordinary business income and $6,000 in tax-exempt income. graphite made a $53,000 cash distribution to each shareholder on 12/31/09. what total amount of income from graphite is includible in smith’s 2009 AGI?

answer is: 40,000

My question here is…how can you determine if the question is asking for total operating income from graphite or total income (including the capital gain share?)

[goodluck2everyone]

if Im not mistaken, capital gain flows through separately from income. Contributions are also not included in income, although they increase the basis. If the question is asking you for the partnership income, you would ignore these things. The question is asking you how much each partner is entitled to receive from the partnership income based on their ownership and since owns 50%, the answer is $40k.

BEC- 80
REG- 68, 71, July
AUD- 61 , 84
FAR- -- 75 🙂

[sunny810]

hi goodluck2everyone,

so if the question asks what is total income to be reported in partnership's individual tax return it would only be the income related to operating/business. all separately stated income (i.e. tax-exempt income) would be ignored in the calculation?

[goodluck2everyone]

you got it

BEC- 80
REG- 68, 71, July
AUD- 61 , 84
FAR- -- 75 🙂

[sunny810]

thank you!

[Author]

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