JK Partnership earns $30 million of non-interest ordinary income. The partnership incurs $12 million of interest expense. Jen and Kai are each 50% partners, sharing all partnership items equally. Assume no taxpayer qualifies for the small business exception. The partnership's ordinary income, after taking interest expense into account, will be
A) $18 million.
B) $21 million.
C) $24 million.
D) $30 million.
B) $21 million.
The interest deduction will be limited to $9 million ($30 million non-interest ordinary income × 30%).
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