McGraw-Hill's Taxation of Business Entities 3rd Edition by Connie Weaver, Brian Spilker, Edmund Outslay, John Robinson, Ronald Worsham, Benjamin Ayers, John Barrick

Exercise 49

The partnership agreement of the G P general partnership states that Gary will receive a guaranteed payment of $13,000, and that Gary and Prudence will share the remaining profits or losses in a 45/55 ratio. For year 1, the G P partnership reports the following results:
a. Compute Gary's share of ordinary income (loss) and separately stated items to be reported on his year 1 Schedule K-1, including his self-employment income (loss).
b. Compute Gary's share of self-employment income (loss) to be reported on his year 1 Schedule K-1, assuming G P is a limited partnership and Gary is a limited partner.
c. What do you believe Gary's share of self-employment income (loss) to be reported on his year 1 Schedule K-1 should be, assuming G P is an LLC and Gary spends 2,000 hours per year working there full time