Question

Kerry is a partner in the Kerry, Davis, Smith & Jones Partnership. Kerry owned 25% from January 1, 2016, to June 30, 2016, when he bought Jones’s 25% interest. He owned 50% for the rest of the year. The partnership had ordinary income of $189,800 and $5,000 in long-term capital gains. Barring any special allocations in a partnership agreement, what is Kerry’s share of income

Oridinary Income-

LTCG-

Answer 1

Share of ordinary income:

	Jan-June	July-Dec	Total
Ordinary income	94,900	94,900	189,800
Share applicable	25%	50%
Share of income	23,725	47,450	71,175

Share of LTCG

	Jan-June	July-Dec	Total
CG income	5,000	5,000	10,000
Share applicable	25%	50%
Share of income	1,250	2,500	3,750