Amit is a partner in Reynolds Partnership. This year, Amit's Schedule K-1 from Reynolds reflected $50,000 of ordinary income, $1,000 of interest income, and a cash distribution of $35,000. Amit's marginal tax rate is 39.6 percent.
a. Calculate the tax cost of Amit's partnership earnings this year.
b. Calculate Amit's after-tax cash flow from his partnership activity this year.