Problem
A has a one-fourth and B a three-fourths interest in a partnership that operates a toy manufacturing company. The partnership files its partnership return on the calendar-year basis. The partnership books disclose the following information for the current calendar year:
Sales $235,000
Returns and allowances 10,000
Opening inventory 50,000
Purchases 50,000
Cost of labor and supplies 105,000
Closing inventory 61,000
Royalties received for use of a patent 1,100
Salaries 26,000
Guaranteed payments to partners (8,400 to each) 16,800
Rent paid 17,000
Interest expense on business debt ( other than payments to partners) 550
Taxes 8,500
Bad debt written off 1,000
Repairs 3,000
Depreciation 2,470
Light, postage, stationery, ect. 1,680
Net long-term capital gain 600
Dividends 200
Compute the partnership income and the partner's distributive shares of items that are required to be separated stated.