O Limited partnership in which the general partner participates in the business

Question

O Limited partnership in which the general partner participates in the business activities. O General partnership in which the corporate partner participates in the business activities. Mark for follow up Question 22 of 75 Aaron Jennings, a partner in an engineering firm, is guaranteed a payment of $50,000 each year without regard to the firm's profits or losses. Assuming the payment is correctly reported to him on a Schedule K-1, how should Aaron report this income on his tax return? O Passive income, reported on Schedule E. O Nonpassive income, reported on Schedule E. O Wages, salaries, tips, etc., reported directly on Form 1040. O Other income, reported directly on Form 1040, Mark for follow up Question 23 of 75.

Explanation / Answer

Solution: Option B

Explanation: Schedule K-1 is used to report the guranteed payments to partners. This are to be considered as active income taxpayer and aren't passive income.

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