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

Exercise 4

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?