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Brent is a limited partner in BC Partnership. His distributive share of partnership income and his...

Brent is a limited partner in BC Partnership. His distributive share of partnership income and his guaranteed payment for the year are as​ follows:

Ordinary income ​$30,000

Short-term capital gain ​$18,000

Guaranteed payment ​$36,000

What is his​ self-employment income?

A. ​$48,000

B. $84,000

C. ​$36,000

D. ​$66,000

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Answer #1

As per the relevant provosions, both incomes received from partnership (distributive share of partnership and guaranteed payment) will form part of self-employement income and is liable to self employement tax.

However, Short term capital gains dosen't form part of self employement income.

Hence, Brent's self employement income shall be computed as follows -

Ordinary income (distributive share of partnership) ​$30,000

+ Guaranteed payment ​$36,000

Total self employement income = $66,000

Hence, the correct answer is D) $66,000

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