Question

Lara is a 50% partner in Dana's deli, she is to receive a guaranteed payment of $20,000. if the partnership's ordinary income before deductions I a guaranteed payment is $55,000, what is Lara's distributive share?

Answer 1

In this question, Lara is 50% partner of Dana's Deli. here there is two scenario.

a. Guaranteed payment in partneship firm.  

This means a partner can receive a guaranteed payment irrespective of the firm making profit or loss. here Lara is having the previlege to receive $ 20,000/- even if the firm making loss.

b. Distributive Share:

Distributive share means the partners receive the share of ordinary income according to the partner share in the agreement. In this question Lara is a 50% partner of the firm and the ordinary income before deduction of guaranteed payment is $55000. And The question is what is Lara's Distributive share. i.e, 50% of $ 55,000 is equal to $27500.

The answer is $27500.