Axel is a calendar-year taxpayer. He is a 25% partner in GNR Partnership, which

Question

Axel is a calendar-year taxpayer. He is a 25% partner in GNR Partnership, which uses an August 31 fiscal year-end. GNR Partnership had $120,000 of ordinary income for the year ended August 31, 2004 and $150,000 of ordinary income for the year ended August 31, 2005. Axel withdrew $50,000 from the partnership on December 1, 2004 when he had a basis of $138,000 in the partnership. What amount should Axel report on her 2004 tax return as ordinary income from GNR Partnership?
a. $30,000 b.$37,500 c.$50,000 d. $80,000

Explanation / Answer

a. $30,000 Axel partnership in GNR = 25% Ordinary income of GNR on August31, 2004 = $120,000 Axel ordinary income = $30,000 (120000 * 25%) There is no need to consider remaining items for calculating Axel ordinary income. Axel partnership in GNR = 25% Ordinary income of GNR on August31, 2004 = $120,000 Axel ordinary income = $30,000 (120000 * 25%)

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