DIP Partnership reports ordinary income (before guaranteed payments) of $120,000, rent expense of $40,000, and interest income of $4,000 for the year. In addition, DIP paid guaranteed payments to partner Percy of $20,000. If Percy owns a 40% capital and profits interest, how much income will he report for the year and what is its characterA) $24,000 ordinary income. B) $24,000 ordinary income, $1,600 interest income, $20,000 guaranteed payment. C) $25,600 ordinary income. D) $32,000 ordinary income, $1,600 interest income. E) $32,000 ordinary income, $1,600 interest income, $20,000 guaranteed payment.

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15 June, 15:02

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Nola Ray · Answer 1

Option D ($32,000 ordinary income, $1,600 interest income) is correct.