The partnership agreement of the G&P general partnership states that Gary will receive a guaranteed payment of $17,900, 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:
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?
Sales revenue
$ 81,500
Gain on sale of land (§1231) $ 7,200
Cost of goods sold $ (36,000 )
Depreciation-MACRS $ (17,300 )
Employee wages $ (20,400 )
Cash charitable contributions $ (3,800 )
Municipal bond interest $ 3,200
Other expenses $ (4,500