Question

Mabel, Loretta, and Margaret are equal partners in a local restaurant. The restaurant reports the following items for the current year:

Revenue	$	600,000
Business expenses		310,000
Investment expenses		150,000
Short-term capital gains		157,000
Short-term capital losses		(213,000	)

Each partner receives a Schedule K-1 with one-third of the preceding items reported to her.

How must each individual report these results on her Form 1040? schedule A, D, E

Answer 1

Revenue	$600,000
Less: Business Expense	$310,000
Ordinary Income	$290,000	$96,666.67
$96667 (290000 x 1/3) will be rreported as ordinary income in Schedule E Page 2)
Investment expense	150000
$50000 (150000 x 1/3) will be reported as itemized deduction in schedule A limited to amount invested
Net short term capital loss	-56000	-18666.667
Loss of $18667 will be reported in Schedule D