Mabel, Loretta, and Margaret are equal partners in a local restaurant. The resta

Question

Mabel, Loretta, and Margaret are equal partners in a local restaurant. The restaurant reports the following items for the current year:

Revenue $ 490,000

Business expenses 255,000

Investment expenses 124,500

Short-term capital gains 107,000

Short-term capital losses (151,300 )

Each partner receives a Schedule K-1 with one-third of the preceding items reported to her. How must each individual report these results on her Form 1040? (Do not round any division. Round your final answer to the nearest whole dollar value. Negative amounts should be indicated by a minus sign.)

Schedule A Schedule D Schedule E

Explanation / Answer

Answer

Schedule A

Investment Expense $124500

Itemized deduction on Schedule A (limited to investment income)

$124500*50% = $62250

Schedule D

Net Short-term capital loss $151300

Schedule D =151300*50%

=$75650

The loss is netted against other short-term and long-term capital gains.

Schedule E

Revenue 490000 Expenses 255000 Ordinary Income 235000 Schedule E (235000*50%) 117500

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